Money in Motion

Your Safety Trade for the Week


Between China's slowing growth and concerns about the euro zone crisis, it's not a bad week to keep risk off. Here's one strategist's plan.

Todd Gordon, co-head of research and trading at Aspen Trading Group, is a technical analyst, but he also looks at fundamentals. And he sees a fundamental concern in Canada that he thinks could hit the Canadian dollar.

"The Canadian household sector is a little leveraged up," Gordon told CNBC's Melissa Lee, with 140% household debt to disposable income, compared to 110% in the U.S. Also, total debt to GDP is trending up in Canada.

Money In Motion: The Safe Trade

"If we do hit another rough patch in the economy, Canada is actually vulnerable from a leverage standpoint," Gordon says.

From a technical standpoint, Gordon notes that the Canadian dollar  "often acts as a leading indicator" to other currencies, and points out that the loonie was slipping against the dollar while the S&P 500 index was testing an upper 1225 to 1230 level.

So he recommends selling the Canadian dollar against the greenback while the S&P is around 1220 to 1225, entering the trade at 1.0150 with a stop at 0.9995 and a target of 1.0500.

You can watch the whole discussion in the videotape.

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 Currency Terms. Top currency strategies are broken down for you in Currency Class.

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