Busch: Currency Trade Updates

Here’s a quick roundup/review of the trades. Remember, FX trading strategies are not meant to be precise for the levels of entry or exit as conditions change rapidly. Please make adjustments to get in and out of trades as conditions warrant. All trade suggestions can be seen as an overall view for trading. Since many of you have asked about these trades and got them on, I wanted to provide additional guidance.

  1. January 30th: Buy USD/Sell JPY at 76.40. T/P hit at 81.45.
  2. Feb 22nd: Sell EUR/Buy GBP at 0.8510. (assume entry, but high was 0.8506)
  3. Feb 24th: Sell AUD/Buy Cad at 1.0740.

The first trade is self-explanatory and I’ve had suggestions about adjusting this over the life of the trade (from cutting it in half to getting back long again).

If you got the second trade done on Friday when we popped to 0.8506, then you should adjust the parameters by the levels you entered this trade. The original was to sell at 0.8510 with a stop at 0.8530 and a profit at 0.8410. I would recommend you adjust downwards your profit and stop based on your entry point with the overall ratios intact. Note on this trade, the GBP was beat up all last week on the BOE minutes and the general EUR rally. However, the G20 news over the weekend has driven down the EUR and the BOE QE negative has been tempered by BOE’s Fischer who said the UK was unlikely to engage in more QE if the country’s economy stayed on its current path.

Finally Friday on CNBC’s Money in Motion, I recommended this trade:

  • Sell AUD/Buy CAD
  • Entry 1.0740
  • S/L 1.0805
  • T/P 1.0570

The concept for this trade was simple: On Wednesday, Bernanke speaks to Congress and provides his view on the US economy. The last FOMC and surrounding Fed commentary was very dovish and made the case for additional QE if the US economy faltered. Since that time, the US economy has continued to improve. Therefore if Bernanke backs off QE3, then we want to sell a risk currency and buy an oil currency (oil should stay firm due to Iran).

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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