Here's how to set yourself up for Fed Chairman Ben Bernanke's upcoming Congressional testimony.
Ready for Federal Reserve ChairmanBen Bernanke's Congressional testimony? Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, has a playbook.
Bourdeau notes that Bernanke has said he is ready to take action as warranted, but so far he has been vague about what that means.
If Bernanke does not signal that stimulus action is imminent, Bourdeau expects risk-sensitive assets to sell off, and she recommends selling the Australian dollar against the U.S. dollar. But if he indicates that a move is possible, or perhaps discusses the benefits of further easing, "you'd want to buy the Aussie dollar."
For now, Bourdeau is putting her chips on the first scenario. "I do ultimately think we're going to be disappointed by Bernanke next week. I think he's going to bide his time", she told CNBC's Melissa Lee. Bourdeau expects the chairman to wait for more reports on employment and, perhaps, a Greek bond redemption before deciding on a course of action, she says.
So Bourdeau wants to sell the Aussie against the dollar. She recommends entering the trade at 1.0250 with a target of 1.0100 and a stop loss at 1.0330.