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Bumps Remain For Currencies

Wednesday, 30 Nov 2011 | 4:10 PM ET
Betty Davis in 'All About Eve'
Hulton Archive | Getty Images
Betty Davis in 'All About Eve'

Calling Bette Davis - there is plenty of fuel for a continued bumpy ride in the currency markets, this strategist says.

Between central bank actions and economic reports, it's been quite a day in the currency markets, with the euro up close to 1%, commodity-linked currencies like the Australian dollar up even more, and the dollar slumping. Sue Trinh, a currency strategist at RBC Capital Markets says there are still bumps ahead.

"Expect volatility to be elevated in the next 24-48 hrs with a flood of global PMIs, roughly 10 billion euros of Spanish and French supply and US non-farm payrolls," she told clients.

How do you trade all this? Well, you can try the euro. "So far this week, EURUSD rallies have been sold into and this looks likely to continue," Amelia Bourdeau, director of FX institutional sales at Westpac, wrote in a note to clients.

What with extensive short positions in the euro, traders are nervous about taking on more short positions, she told me - but the currency's upside is limited by worries about ailing peripheral countries like Italy, so it has been in a range of 1.32-1.50. Bourdeau suggests selling the euro near the top of that range, and says, "Downside EURUSD levels to watch are 1.3200 and 1.3140."

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.

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