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The Currency Trade Behind Jackson Hole

Friday, 26 Aug 2011 | 7:29 PM ET
Ben Bernanke at Jackson Hole, Wyoming.
CNBC
Ben Bernanke at Jackson Hole, Wyoming.

Fed Chairman Ben Bernanke has spoken, and now it's European Central Bank President Jean-Claude Trichet's turn. Here's how to trade the central banker-speak.

Investors were on the edge of their seats when Fed Chairman Ben Bernanke spoke Friday in Jackson Hole. He didn't deliver the red meat they hoped for, but he did say he's got monetary tools to goose the economy if necessary.

Now, stay tuned for European Central Bank President Jean-Claude Trichet's speech Saturday. Some say he may take a more dovish stance on interest rates - but whatever he says, it could bring investors' focus back to Europe, says Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank. And that, she says, can only be a negative for the euro.

"It would be interesting if he acknowledges that growth has started to slow in the euro zone," Bourdeau told CNBC's Melissa Lee. "We've had a lot of negative news in the euro zone this week that the market has completely ignored," like weaker than expected GDP reports for both Germany and the euro zone overall.

On top of the negative economic news, Bourdeau sees "bumpy roads ahead, with the Parliaments in the euro zone having to approve that bailout" for Greece. Trichet will be pressed on his plans in Brussels Monday when he attends a special meeting of the European Parliament's economics committee focused on the debt crisis.Noting that the euro is near the upper end of its recent trading range, Bourdeau recommends selling the euro against the dollar at $1.4490 with a stop loss at $1.4650 and a target of $1.4100.

Money Match Up
Trading Trichet and Bernanke. Will Trichet soften his tone at Jackson Hole? And the currency trade behind the conference, with Michelle Meyer, BofA Merrill Lynch, and CNBC's Melissa Lee & the Money in Motion traders.

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