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Your Currency Trade When Investors Take Cover

Tuesday, 20 Sep 2011 | 9:26 AM ET

The storm of dire news from Europe is hurting risk-on currencies. Here's how to trade the cautious sentiment.

You can't really blame investors for being gun-shy, what with Greece close to default, Italy taking a rating cut, and European leaders at odds over how to deal with any of it.

The question is how to trade the new caution.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, thinks risk-averse investors will be selling commodity currencies, and she recommends selling the Australian dollar against the U.S. dollar as a result.

Trading the Troika
Greece will default in the next three to four months, says Amelia Bourdeau, Westpac Institutional Bank.

"Moving forward, I see downward pressure on the euro," Bourdeau told CNBC's Melissa Lee. "It is susceptible to swings, but I think that overriding risk is going to hit the commodity currencies, which is why I like to be short Aussie dollar."

Bourdeau wants to sell the Aussie at around 102.50 and look for a move to 100.00 with a stop at 103.35.

You can watch the whole discussion in the video clip.

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.

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