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Your Currency Trade on Hurricane Sandy

Friday, 26 Oct 2012 | 7:08 PM ET
Don Klumpp | Iconica | Getty Images

If you live in the northeast, you're probably preparing for Hurricane Sandy. This currency investor has a hurricane trading plan, too.

Ready for Hurricane Sandy? No doubt you are considering stocking up on bottled water and the like, but remember - there are also currency trading opportunities from the storm.

Hurricanes that hit the U.S. often cause lots of disruption in energy production, since they frequently affect the Gulf Coast, but Sandy's chief impact appears likely to be further north.

That said, there still could be ripple effects in the so-called commodity currencies.

When Andrew Busch, global currency and public policy strategist at BMO Capital Markets, trades on hurricanes, "it's energy, energy, energy, and that's why we always look at Canada and the Norwegian krone," he told CNBC's Melissa Lee. "Those are the two countries that are energy impacted because they export a lot of this stuff."

Hurricane Headwinds for Currencies
Reynolds Wolff, Weather Channel, reports on Hurricane Sandy's next move. And how will the weather impact currencies, with CNBC's Melissa Lee and the Money In Motion traders.

During Hurricanes Katrina and Rita, oil prices rose roughly $14 per barrel, Busch says, while the Canadian dollar dropped about 700 pips and the Norwegian krone fell about 4,500 pips. Then in 2011, ahead of Hurricane Irene, oil rose about $3, the Canadian dollar fell 130 pips, and the Norwegian krone dropped 1,300 pips. But if you're trading on Sandy, step lively. "It's always the anticipation of the event, maybe not the event itself, that gets the biggest market movement," Busch says.

Brian Kelly of Shelter Harbor Capital notes that prices of certain oil products - heating oil and gasoline - already got a bounce on Friday.

Tracking Currencies

  Name Price   Change %Change Volume
EUR/USD
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GBP/USD
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JPY/USD
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CHFUSD
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AUD/USD
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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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