Money in Motion

How to Play a Better Than Expected Fourth Quarter

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Think pessimism about the US and commodities is overdone? Here's the trade for you.

There sure is a lot of pessimism out there when it comes to commodities and the US economy. Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional, thinks it's overdone.

"Longer term I think the U.S. is going to struggle, especially as fiscal policy tightens," Patterson told CNBC's Scott Wapner, and that will hurt Canada too. But for now, given decent nonfarm payrolls, car sales, and retail sales, "Indications are good."

Money in Motion Trade

Patterson also thinks the pessimism about China is overdone.

So Patterson sees an opportunity in the Canadian dollar, which is typically sensitive to both commodities and the US economy. 

"What I'm trying to do here is play a range in the dollar vs. the Canadian dollar. I think that a lot of bad news is priced in both for China and the US, perhaps a but too much so at the margin," she says.

Patterson is looking for dips in the Canadian dollar, which could come from a disappointing inflation report or worries about Europe, and she would sell the US dollar against the Canadian dollar at 1.03, with a stop at 1.045 and a target of 0.98.

You can watch the whole discussion in the video tape.

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