Money in Motion

Your Currency Play on a Stronger Stock Market

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Economic indicators in the U.S. are improving, and this strategist says that means upside potential down under.

Sure, with Europe and the euro in trouble, the dollar looks relatively good. Decent economic news doesn't hurt either. But "I think the dollar is a sell elsewhere," says Todd Gordon, co-head of research and trading at Aspen Trading Group. For real upside, he is looking at Australia.

"The Australian dollar is well correlated to the S&P and to the American economy, and I think the Australian dollar is a buy to the upside" he says. Also, Gordon told CNBC's Melissa Lee, the Reserve Bank of Australia is close to finishing a round of interest-rate cuts that have been weighing on the Aussie.

Gordon wants to buy the Australian dollar against the dollar at 1.0225 with a stop at 0./9950 and he thinks it could strengthen to 1.1050.

One thing to keep in mind: with trading thin as the end of the year approaches, stops are even more critical than usual to avoid any quick market swings.

You can watch the discussion on 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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