China's growth rate is slowing, and investors are hoping for easier monetary policy. Here's how to trade the possibility.
Does China have a soft landing in its economic future? GDP growth is slowing, and other indicators are confirming the trend. Naturally, investors are hoping for easier monetary policy as a result, and Andrew Busch, global currency and public policy strategist for BMO Capital, has a plan to trade that possibility.
Busch thinks the key is what China's central bank does with reserve requirements. They were last loosened, by 50 basis points, just weeks ago, and Busch argues that if the next round is bigger than that, it will be time to enter a risk-on trade, buying the Australian dollar against the U.S. dollar. Australia is especially attractive for this trade, Busch says, given its close economic ties to China.