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The Currency Trade Behind Europe's Latest Crisis

Friday, 16 Sep 2011 | 8:01 PM ET
Stephen Studd | Photographer's Choice | Getty Images

With little or nothing positive on the horizon for Europe, here's a way to trade into a healthier economy.

The drumbeat of bad news from Europe has been kind of relentless lately. The stability fund will not be finished on time, and no one seems to making progress on dealing with Greece.

Also, when Treasury Secretary Timothy Geithner attend the EU finance ministers' meeting he got a bit of a cold shoulder, according to Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional.

"I don't see much helping the euro," she told CNBC's Melissa Lee.

Patterson recommends selling the euro - against the Singapore dollar.

"Singapore is the Switzerland of Asia," Patterson says, pointing to the country's current account and budget surpluses and robust GDP growth. "These are amazing fundamentals. This is where people want to be." On top of all that, she says, the Singapore dollar sold off in the last several days as hedge funds reduced their emerging market positions.

Patterson suggests selling the euro at 1.74 with a target of 1.68 and a stop loss of 1.77.

Andrew Busch, global currency and public policy strategist for BMO Capital, likes the trade too. He calls it "the safe way of selling euros," and suggests selling the euro against the dollar if you are looking for a more aggressive trade.

Waiting on Europe
The Euro crisis deepens as finance ministers kick the can. Will Europe vote on a bigger bailout fund? The currency trade behind Europe's latest crisis, with CNBC's Melissa Lee and the Money In Motion traders.

You can watch the discussion in this videotape.

MULTI CURRENCIES v The Dollar

Tune 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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