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How to Trade a Safe Haven Currency That Isn't

Tuesday, 30 Aug 2011 | 10:36 AM ET
Ian Mckinnell | Photographer's Choice RF | Getty Images

The real safe haven currency is about to stand up, this strategist says.

Time was, the dollar, Swiss franc, and Japanese yen all offered investors safe havens from currency storms. But with low U.S. interest rates battering the dollar and the determination of the Swiss National Bank to weaken the franc, the real safe haven these days is Japan, says Todd Gordon, co-head of research and trading at Aspen Trading Group.

Swiss Franc = Safe Haven?
If and when the S&P 500 rolls over, CHF/JPY will selloff, says Todd Gordon, Aspen Trading.

"Swiss franc has lost this status," Gordon told CNBC's Melissa Lee. "I think the Swiss franc is going to weaken as the overall risk trade heads lower," since gun-shy investors will be wary of more central bank intervention in Switzerland.

In Japan, though, the picture is very different, Gordon says. It's unclear who the finance minister will be now that Yoshihiko Noda is becoming prime minister, and in any case, the Japanese have been unable to stem the yen's rise without multilateral coordination.

Gordon recommends selling the Swiss franc against the yen at 95.00, with a stop at 95.70 and a target of 92.00.

You can watch the discussion in the video above.

left/CNBC/Sections/News_And_Analysis/__Story_Inserts/graphics/__ICONS/icon_story_360_TV.gif1505000lefttruehttp://msnbcmedia.msn.comCNBC 360 TVfalse1PfalsefalsefalsefalseCNBC TVTune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at moneyinmotion@cnbc.com.

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