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How to Trade on the Upcoming Fed Meeting

Traders work in the ten-year U.S. Treasury Note options pit at the Chicago Board of Trade in Chicago, Illinois, U.S.
Daniel Acker | Bloomberg | Getty Images
Traders work in the ten-year U.S. Treasury Note options pit at the Chicago Board of Trade in Chicago, Illinois, U.S.

With the Bank of Japan and the Fed meeting this week, it's time to watch for who is really the "big easer."

Both Japan and the U.S. have been emitting mixed economic signals lately, so the upcoming Federal Reserve and Bank of Japan meetings should create some currency excitement.

Lawrence Goodman, president of the Center for Financial Stability and a former Treasury official, told CNBC's Simon Hobbs that he thinks the banks will strike similar tones.

"Central banks are confronting a world with slow and sluggish growth, and they want to act. So the central banks such as the Fed and BOJ, where we will get more information next week, are going to be adopting relatively easy monetary stances," he says. But in the U.S., he adds, "the risk is that the forecasts themselves will change" and indicate more growth than they had before.

Brian Kelly of Shelter Harbor Capital thinks the Fed may go further. Pointing to recent statements by normally dovish officials, he says, "I think actually the Fed is leading a lot more hawkish than people are giving them credit for."

So Kelly wants to buy the dollar and sell the yen. "The Japanese have long way to go in their money printing process," he says.

He recommends entering the trade at 81.60, setting a stop at 81.20, and targeting a move to 83.00.

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 Terms Dictionary. 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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