Trading the Less-Than-Safe Havens

Stack of U.S. hundred-dollar bills
Stack of U.S. hundred-dollar bills

The dollar is no longer the currency everyone loves to hate. Here's how to trade the shift.

Remember when the dollar was ranked right up there as a safe currency for parking money in risky times, and a dud any other time? That is so yesterday.

Lackluster housing data aside, the economic outlook for the U.S. is improving, and asset managers are starting to embrace the buck. Willie Williams, director of institutional FX derivative sales at Societe Generale, sees why.

"In the current environment, we have so many countries looking to employ monetary stimulus, between the Bank of Japan and the Swiss National Bank," he says. "The dollar is now becoming the least attractive of the funding currencies."

The yen is becoming a better currency to sell, Williams says. "The key is whether the Bank of Japan can regain credibility as a deflation fighter," he told CNBC's Scott Wapner. Between monetary tools it can employ and the pressures of higher electricity and oil prices, "I think we can see the yen decline."

But Williams is even more interested in selling the Swiss franc. "As we sit above the 200-day moving average for dollar-Swiss, it's attractive, and we're near the Swiss National Bank's floor for euro-Swiss at 1.2050, which makes dollar-Swiss look like an attractive buy," he says.

Williams wants to enter the trade at 0.9025 with a stop at 0.8850 and a target of 0.9500.

You can watch the discussion on this video.



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