How to Trade the Jobs Report

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The strong employment news has strategists racing to find trades on a stronger U.S. economy.

That payroll data sure made stock investors happy - but it's not doing much for the dollar. Capital outflows are the culprit, says Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional.

"You tend to see more confidence among U.S. investors. Equity markets go up and Americans put more money overseas, so the dollar actually goes down," she told CNBC's Scott Wapner.

Still, Patterson thinks it makes sense to trade the good news - especially comparing the U.S. situation to Europe, where the cost of the Greek bailout package appears to be mounting. So she wants to sell the euro against a different North American currency: the Canadian dollar.

"Canada and Mexico are leveraged plays on the United States," she says.

"They both have huge trade links, so if the U.S. does well, Canada tends to do well as well, and the Canadian dollar tends to rally."

Plus, with interest rates higher up north, there is slightly better carry.

Patterson thinks the euro could strengthen next week if the European Central Bank opts not to cut interest rates, so she recommends waiting to see if it's possible to enter the trade at 1.32. She wants to set a stop at 1.36 and she would look for a move to 1.28.

You can watch the discussion on the video.

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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