Money in Motion

How to Trade Friday's Employment Report

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That old nonfarm payroll number is coming, and this strategist has a trading plan.

Just in case you thought the employment outlook was stabilizing, along comes another nonfarm payroll report to shake things up. And one way or another, Friday's data is likely to move the dollar, says Andrew Busch, global currency and public policy strategist for BMO Capital.

Busch pegs market forecasts for payroll growth at around 150,000, and he thinks a report right around that figure will be hard to trade. But a report that comes in well above or below that figure - over 175,000 or below 125,000 - is another story, he told CNBC's Scott Wapner.

If the report is stronger than expected, Busch wants to buy the dollar against the Australian dollar. Australia just cut interest rates, and strategists say it might do so again - and a strong report in the U.S. would make another round of quantitative easing less likely, he says.

On the other hand, "if we come in weaker than expected, I want to buy Mexico  and sell U.S. dollars," Busch says. It's a little counterintuitive, since the Mexican peso often trades like a high-beta proxy for the dollar. But Busch says a weak report would spur talk of more quantitative easing, which in turn would stimulate the economy - and lift the peso.

Busch wants to enter the trade at 13.00 with a stop at 13.10 and a target of 12.70.

"It's a little weird, but think through it and I think it will work really well," he says.

You can watch the discussion in the video clip.

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