Busch: Money In Motion Trade Update

On May 4, I recommended shorting the euro against the British pound due to my belief that the European Central Bank would be dovish in their commentary.

Here was the structure:

Sell euro, buy British pound

  • Entry 0.9025
  • S/L 0.9075
  • T/P 0.8675

On May 5, the ECB dropped the “strong vigilance” inflation language and the Eur.Gbp sank.

Then on May 6, we had the Der Spiegel article on Greecepossibly pulling out of the euro zone, and the party was on for this trade.

On CNBC's Money in Motionlast Friday, I recommended cutting back on this trade as it had a very large move in a very short period of time and I wanted to take some risk off the table.

Since we had 2/3rds of the move I was anticipating, I said to cut 2/3rds of the position at 0.8775 and move the stop down to where we got short at 0.9025.

Andrew B. BuschDirector, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a contributor to CNBC's Money in Motion Currency Trading.You can comment on his piece and reach him hereand you can follow him on Twitter at http://twitter.com/abusch.

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