Strategist: Shifting Winds Ahead for the Greenback

Monday, 19 Mar 2012 | 11:49 AM ET

There sure has been a lot of news moving currencies lately.

But "in many ways, nothing has changed," says John Taylor of FX Concepts. "Europe is looking weak, the United States is looking stronger, and we're worried about China."

Adding it all up, Taylor is short the dollar - but he doesn't plan to stay that way, he told CNBC's Scott Wapner.

"The reason I'm expecting the dollar to do better is because the economy is looking better than Europe, and interest rates are going up, partly because China is not going to be investing as much money in our government bond market," Taylor says. "In both China and Japan, big investors in the U.S. government bond market don't have the money they did before."

Taylor: Short the Greenback Now
John Taylor, FX Concepts, says investors should "short" the dollar, and explains why Treasurys appear to be breaking down: China and Japan don't have the money to invest in the U.S., he says. And Brian Modoff, analyst at Deutsche Bank, weighs in on Cisco stock after the company's $5 billion deal to acquire NDS Group.

So how do you trade this view?

Brian Kelly of Shelter Harbor Capital, another currency expert and a dollar bull, has two suggestions.

"Probably the best trade, if you want a longer term trade, is to short the Japanese yen and go long the U.S. dollar," he says. "If you really want to get some juice on the u.s. economy, buy the Mexican peso."

You can watch the discussion on the video.

Editor's Note: An earlier version of this story misstated Mr. Taylor's firm. The error has been corrected.

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