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How to Use Currencies to Trade the Payroll Report

Friday, 2 Mar 2012 | 7:34 PM ET
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Ready for the latest employment data? This strategist has a trading plan.

Don't look now, but there are signs that employment could be at a turning point - or so says Joe Lavorgna, Deutsche Bank's chief economist.

"The street is missing what we're seeing in the various consumer confidence sentiment surveys," he told CNBC's Melissa Lee. Lavorgna argues that the improvement in what consumers are saying about the labor market "is typically reflective of an inflection point" in the economy.

Lavorgna expects the next nonfarm payrolls report, on March 9, to beat investors expectations and come in close to 255,000.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, is also bullish on employment - and she has a currency trading plan.

If payrolls come in under 200,000, Bourdeau wants to sell the dollar against the Japanese yen, on the theory that risk aversion would hit the dollar harder. But if payrolls come in better than expected - her more likely case - Bourdeau wants to sell the dollar against the Canadian dollar.

"Better data for the U.S. benefits Canada as well," she explains.

Bourdeau wants to enter the trade at 0.9880 with a stop at 1.0060 and a target of 0.9400.

Money Match Up
Oil hits a 9-month high on global recovery, and geopolitical risks. A look at crude's next move, with CNBC's Melissa Lee and the Money in Motion traders. Also, will Obama tap the strategic oil reserve, with Dennis Gartman, the Gartman Letter. And how you can make money off next week's jobs report, with Deutsche Bank's Joe LaVorgna.

You can watch the discussion on this video.

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CURRENCY FUTURES

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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