How to Trade the Other Sovereign Debt Mess


Safe-haven Japan's sovereign debt just got downgraded. Here's how to trade on the news.

Both the euro and the dollar hit record lows against the Swiss franc today, and Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, says it's all about safety.

"The Swiss franc is the best performing currency today, this week, this month, and this year," she told CNBC.

Of course, much of the rise in the Swiss franc stems from currency investors seeking safe havens. That also helps to explain why the yen has been holding up relatively well. If so, that bodes ill for the yen.

In the meantime, the Australian dollar has been slipping in this risk-averse environment: it's down around $1.06, from roughly $1.10 just a few weeks ago. So Patterson thinks it's time to buy the Aussie against the yen.

"It's a good technically supported, positive-carry trade, and if risk appetite stabilizes like it is today, early next week I think this will play out," she says.

Patterson recommends buying the Australian dollar against the yen around current levels, roughly 86.40, with a stop at 84.70 and a target of 90.

You can watch the whole discussion in the video clip, starting at 2:35.


Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm.

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