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How to Trade the Risk-On Currency Rally

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It's been an ama-a-a-zing week for risk-on currencies, but this strategist thinks a shift is coming.

What a week! Between the U.S. economic growth report, strong data from China, and the European debt deal, "Everything broke risk's way this week," says Andrew Busch, global currency and public policy strategist for BMO Capital.

But Busch has no interest in staying late at this particular party. "Let's take a look at maybe backing down some of this huge risk-on move for currencies overall," he told CNBC's Scott Wapner.

Rather than position with the euro, Busch wants to sell the Australian dollar. It moved way up over the past week, and with a central bank meeting in the coming week, there is some uncertainty about interest rates. So Busch wants to sell the Aussie against the New Zealand dollar

at 1.3090 with a stop at 1.3150 and a target of 1.2825.

"Over the weekend, anything can happen," he says. "If you have anything to back down on Europe, or anything to back down on the China growth story, this will work really well."

Todd Gordon, co-head of research and trading at Aspen Trading Group, likes the trade as well. "I don't care how strong the fundamentals are in the U.S., this market's overbought and it's due to pull back," he says. But he suggests setting a stop that's not quite so tight.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, points out that the New Zealand dollar may have some room to rise. New Zealand will report third quarter employment in the coming week, and there could be a nice temporary boost from the rugby World Cup - which, she adds, New Zealand won. "What is not to like about New Zealand at this point?" she asks.

You can watch the whole discussion on this videotape.

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