How to Play the Central Bank Meetfest
Nine - yes, nine - central banks will meet this week. Here's how to trade on all the confabs.
Central bankers sure are chatty this time of year. Nine central banks will have meetings before this week is over, and Andrew Busch, global currency and public policy strategist for BMO Capital, sees a north-south trading opportunity.
Busch compared economic data in Canada and New Zealand - both of which have central bank meetings this week - and he thinks the kiwi is poised to outperform the Canadian dollar. "We just had some really poor data out on Canada, the unemployment numbers - not that New Zealand is great, but they look better than Canada at this point," he told CNBC's Simon Hobbs.
Interest rates also favor New Zealand, Busch says. "New Zealand is expecting to see interest rates move up in about a year or so. Canada is definitely flat lining here. No one is expecting them to raise rates," he says. "As far as New Zealand goes, last time in October they said our overnight rates are exception exceptionally low."
So Busch wants to buy the kiwi against the Canadian dollar at around 0.7875 with a stop at 0.7735 and a target of 0.8275.
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.
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