Money in Motion

How to Trade the GDP Report

Businessman with crystal ball
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New GDP data will be released on Friday, and this strategist has a trading plan.

Investors have already gotten plenty of economic data to chew over, and now they can look forward to a GDP report on Friday.

Andrew Busch, global currency and public policy strategist for BMO Capital, has a trading game plan.

The consensus forecast calls for GDP to increase 3 percent, Busch told CNBC's Simon Hobbs, and if the number comes in close to that figure, he doesn't see much of a trade. But if the number falls short, Busch says, "then I want to buy the U.S. dollar - that's risk off - and sell the Swedish krona," since the latest Swedish economic reports were dismal. 

Money In Motion: Trading the GDP Numbers

On the flip side, if GDP comes in over 3.5 percent, Busch would go into a risk-on trade. "I want to buy Mexico   because that's a country that's experiencing good growth," he says, not to mention interest rates around 4.5 percent. And he would sell the yen because Japan just came out with its first year-long trade deficit in decades, which is "taking out a lot of the oomph for the yen."

Busch wants to wait for a pullback and then buy the peso against the yen  at 5.880 with a target of 6.285 and a stop of 5.785, just below a recent high.

"Anything associated with the U.S. is growing, and being able to export into the U.S. is helpful," he says.

You can watch the discussion on the video.

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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