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Your Currency Trade for European Turmoil

Tuesday, 1 Nov 2011 | 3:48 PM ET
Greek Labor Unions Strike
AP
Greek Labor Unions Strike

Greece is roiling the currency markets with its debt-referendum plans. Here's how to trade the turmoil.

Just when you thought it was safe to go risk-on, what with the euro over 1.42 against the dollar, Greece up and announces a referendumon the latest debt deal. Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional, says it's just one of many contributors to the volatility that's roiling currency markets - and sending the euro down around 1.36.

"The fact that the major volatility index is up 20% today tells me we're in a highly uncertain time," she told CNBC's Scott Wapner. She anticipates plenty of ups and downs in coming days, what with things like payroll data and a Fed meeting in the offing. Ultimately though, "the euro's heading lower over the next months and quarters," she says, to perhaps 1.30.

Optimism Surrounding Euro Fades
More uncertainty surrounds Europe as Greece calls for a surprise referendum, with Rebecca Patterson, JPMorgan Asset Management.

In Japan, meanwhile, the central bank is striving mightily to curb the yen's strength, but Patterson is adamant that "unilateral intervention does not work." She also thinks waning risk appetite could lift the Japanese currency.

Patterson wants to sell the euro against the yen, entering the trade at 107.00 with a stop at 109.25 and a target of 102.00.

You can watch the whole discussion on the videotape.

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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