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EUR/CHF

  • #6,741
  • May 10, 2012 3:26am May 10, 2012 3:26am
Quoting tunera
So, imports inflation now is getting high, we see that eurchf is pegged on the downside (floor) because of deflation and exports problem, on the upside we have imports inflation problems, this may explain why the snb buy at 1.20 and sell above it, scary.
This pair can really stay in this thight range for months to come, and when total inflation (as snb forecast) will grow up again, the only thing to do will be remove the floor and allow the pair to fall.

Make sense?

In other words, i'm starting to re-consider the whole buy-eurchf thing, just...
i'm holding mine
  • #6,742
  • Edited 3:56am May 10, 2012 3:37am | Edited 3:56am
Quoting tunera
So, imports inflation now is getting high, we see that eurchf is pegged on the downside (floor) because of deflation and exports problem, on the upside we have imports inflation problems, this may explain why the snb buy at 1.20 and sell above it, scary.
This pair can really stay in this thight range for months to come, and when total inflation (as snb forecast) will grow up again, the only thing to do will be remove the floor and allow the pair to fall.

Make sense?

In other words, i'm starting to re-consider the whole buy-eurchf thing, just...
hmmm quite interesting piece however I think it is partly based on false assumption, that it puts too much emphasis on outside EU effects despite Swiss econ is too much linked into the EU, and as EU contracts and aggregate (macro) demand for goods decreases it would be very hard or no way that inflation could pick up in CH, a typical "inflationista" and hawkish approach that has been proven wrong during the lesser depression, even the great Bill Gross made this mistake last year on US bonds, and lost.

http://krugman.blogs.nytimes.com/201...tains-wonkish/

On the contrary inflation could pick up when (EU) economy picks up, but then safe haven - as mr. doran also states - currencies will also fall.

what mr doran is talking about that SNB gives up accomodative policy and turns hawkish at the current situation I dont see that (see imf paper for MORE accomodative policy from snb what is that on the zero bound? - money printing), in this EU situation a flying high Swiss economy would truly be a miracle

luckily we can enjoy this movie together with SNB "academists" and can act when processes tend to this way as mr doran states.

in the meantime I make my 2 cents on the more accomodative policy (that also Jordan is talking about)

and remember this is no time for boring central bankers as Hildi states:

http://www.ft.com/intl/cms/s/2/59350...#axzz1uSIHfjAV
  • #6,743
  • May 10, 2012 3:38am May 10, 2012 3:38am
Quoting tunera
http://georgedorgan.livejournal.com/2273.html

what about this, is a long reading but it may help understand the whole situation on eurchf and snb.
Great analysis! Good to read.

What I see is that the 1.20 peg can't be released by SNB. Otherwise the EUR/CHF will drop somewhere under 1.00.

http://www.forexfactory.com/images/icons/icon2.gif SNB will loose a lot on their F/X positions, the price stability goal will also missed (deflation again) no predicitable F/X prices for the companies and a massive scream from media and politicians against Jordan (He has to emigrate http://www.forexfactory.com/images/icons/icon10.gif)

The other thing is that I don't see a high inflation in the next years with the peg at 1.20.

I live in Switzerland and there is still big potential for retailers (cars, drugstore products and food) to lower prices. The prices are still much higher than in Germany. It's more and more fancy for the Swiss to buy the products behind the border. So we see here every 3 months a price reduction round with the retailers.

For excample some drugstore products from Nivea are 3 times more expansive here in Switzerland than in Germany --> still a chance to lower the price!

Another thing I miss in that article is the chance that Greece and other PIIGS will leave the EURO and the "rest- Euro" will getting stronger and stronger.

What about this scenario?
  • #6,744
  • May 10, 2012 3:59am May 10, 2012 3:59am
Quoting Kfp
Great analysis! Good to read.

What I see is that the 1.20 peg can't be released by SNB. Otherwise the EUR/CHF will drop somewhere under 1.00.

http://www.forexfactory.com/images/icons/icon2.gif SNB will loose a lot on their F/X positions, the price stability goal will also missed (deflation again) no predicitable F/X prices for the companies and a massive scream from media and politicians against Jordan (He has to emigrate http://www.forexfactory.com/images/icons/icon10.gif)

The other thing is that I don't see a...
Thank you for your interesting insight, and thanks also to pipxter.
Interesting posts, Kfp you say that for example in Switzerland products from Nivea are 3 times more expensive than in Germany, well technically this is inflation, right?

Follow my thoughts, when price of goods is up we talk about inflation (like i seems to understand is situation on switzerland now).
On the other side, if a Switzerland citizen buy in europe, he can experience a deflation situation (price of goods is low!).

I mean, when there is deflation, a central bank tend to stamp (and sell) money, when there is inflation, a central bank tend to implement monetary mechanism that would strenght it's currency, but in switzerland both situations happen in the same time, how is this possible?
Can we think about an hypothetical solution, so we may figure out the probable snb plans for the eurchf (that's what we care about lol).
What they need to do is:
Let the swiss franc become more strong, and in the same time let it become less strong against the eur.
In other words, the ideal solution would be the eur to become stronger (like, eurusd eurcad eurgbp euraud eur/anything go UP!), and the chf more strong too, but less compared to the eur.
What we need to fix this situation is actually the eur to fix itself, looks like we have a chf undervaluation problem, and a eur (more!) undervaluation problem.
The first thing to do to see eurchf go up is the eur to fix their mess, and yeah it would be good to see greece to get the fuck out, so the eur can go up again.
Looking the eur situation right now (greece always on the edge of bankrupt, spain italy portugal with huge public debts, france economy slowing down) i still think this eurchf may stay in this shit range for long time

Do my thoughts make sense?
  • #6,745
  • May 10, 2012 4:20am May 10, 2012 4:20am
Quoting tunera
Thank you for your interesting insight, and thanks also to pipxter.
Interesting posts, Kfp you say that for example in Switzerland products from Nivea are 3 times more expensive than in Germany, well technically this is inflation, right?

Follow my thoughts, when price of goods is up we talk about inflation (like i seems to understand is situation on switzerland now).
On the other side, if a Switzerland citizen buy in europe, he can experience a deflation situation (price of goods is low!).

I mean, when there is deflation, a central bank...
Or, what they can do is this:
(SNB read, read carefully, Mr. Jordan this message is for you)

1) Buy massively eur-chf, buy eurs and sell chfs, let it go to the sky for the God shake.
2) Buy chf, sell all the other currencies you have (usd, gbp, jpy, sell all them and buy back the chf you sold when buying eur).

At this point, this operation will lower down the internal inflation, and lower down the external (EU) deflation situations.

The only downside is that you will sit on a big pile of eurs, but don't worry the europe situation will fix soon ().
  • #6,746
  • May 10, 2012 4:45am May 10, 2012 4:45am
Current EURCHF statistics for live MT4 accounts:

Long 85% = Long Winning 1% + Long Losing 84%

Short 15% = Short Winning 4% + Short Losing 11%

----------------------------------------------------------------
Activity for EURCHF

4% of live MT4 accounts have an open position in EURCHF
  • #6,747
  • May 10, 2012 5:23am May 10, 2012 5:23am
Colleagues, let's think a bit about what other options are out there. The SNB could for example put in place a corridor. The SNB just has to make an announcement that it expects the EUR/CHF to be at 1,25 by the end of the year and at 1,30 by mid next year. This could be combined with the threat that the SNB will gradually raise the peg if it does not move there by itself. The market will jump up and down first for quite a while (probably between 1,21 and 1,24) and then slowly move into the direction of 1,25 towards the end of the year. The beauty of it, if the Eurozone stabilizes, the EUR/CHF would automatically be free floating again, the SNB just has to remain quiet. What's your take on this?
  • #6,748
  • May 10, 2012 6:18am May 10, 2012 6:18am
Quoting Elephanttalk
Colleagues, let's think a bit about what other options are out there. The SNB could for example put in place a corridor. The SNB just has to make an announcement that it expects the EUR/CHF to be at 1,25 by the end of the year and at 1,30 by mid next year. This could be combined with the threat that the SNB will gradually raise the peg if it does not move there by itself. The market will jump up and down first for quite a while (probably between 1,21 and 1,24) and then slowly move into the direction of 1,25 towards the end of the year. The beauty...
I dont see why they havent does this already to be honest all it needs is a well placed comment and they could move this away from the floor.

which is another reason i found jordans comments on negative interest rates puzzling.
  • #6,749
  • May 10, 2012 6:22am May 10, 2012 6:22am
Quoting brinks
I dont see why they havent does this already to be honest all it needs is a well placed comment and they could move this away from the floor.

which is another reason i found jordans comments on negative interest rates puzzling.
They can comment what they want, the market simply don't trust and don't care anymore about what they say, sorry to say that.
  • #6,750
  • May 10, 2012 6:24am May 10, 2012 6:24am
On the other hand, for those bored of eurchf, there is some nice opportunity in audusd (h&s pattern, main trend continuation).

Anyone join me?
Attached Image (click to enlarge)
Click to Enlarge Name: h&s.gif Size: 18 KB
  • #6,751
  • May 10, 2012 7:39am May 10, 2012 7:39am
14.05. 2012

Jungfraubahn: GV (14.00 Uhr)
Schaffner: Ergebnis H1

CH/BFS: Produzenten- und Importpreisindex im April 2012
SNB: Referat Thomas Jordan

source:
http://www.cash.ch/news/alle/termine...12-1168861-448
  • #6,752
  • May 10, 2012 7:49am May 10, 2012 7:49am
Quoting Elephanttalk
Colleagues, let's think a bit about what other options are out there. The SNB could for example put in place a corridor. The SNB just has to make an announcement that it expects the EUR/CHF to be at 1,25 by the end of the year and at 1,30 by mid next year. This could be combined with the threat that the SNB will gradually raise the peg if it does not move there by itself. The market will jump up and down first for quite a while (probably between 1,21 and 1,24) and then slowly move into the direction of 1,25 towards the end of the year. The beauty...
I am with you.... but it's not SNB or Jordan like.

SNB wants to get rid of the peg. So the market has to move to 1.25 or higher without any speculation of a new peg rise.
The market has to find a new fundamental dynamic.

I don't know how SNB will make this happen.

Maybe they stay at 1.20 bid for the next years and wait until the market decides to go up!!!
  • #6,753
  • May 10, 2012 8:22am May 10, 2012 8:22am
wooo what is happening on the chart, we have just printed fresh new 2days high with stunning 1 pip! maybe snb intervention team (eurchf selling team) is out of the office? go bull candle, go
  • #6,754
  • May 10, 2012 8:37am May 10, 2012 8:37am
Quoting pipxster
wooo what is happening on the chart, we have just printed fresh new 2days high with stunning 1 pip! maybe snb intervention team (eurchf selling team) is out of the office? go bull candle, go
oh dear looks like the intervention team is out of money
  • #6,755
  • May 10, 2012 10:39am May 10, 2012 10:39am
Attached Image (click to enlarge)
Click to Enlarge Name: snb_intervention_briefing.jpg Size: 80 KB
  • #6,756
  • May 10, 2012 10:53am May 10, 2012 10:53am
Quoting tunera
On the other hand, for those bored of eurchf, there is some nice opportunity in audusd (h&s pattern, main trend continuation).

Anyone join me?
Going long or short?
  • #6,757
  • May 10, 2012 11:07am May 10, 2012 11:07am
Quoting druckerei
Going long or short?
I went short, the image briefly explain how i see the audusd market now. Price just jumped to the median line, a little floating drawdown along the way but ok, target the 0.9860 area (december low, fibonacci target (AB=CD) and support trendline of the impulsive downmove, oh and also support pitchfork line.
Will put sl to b/e when price reach the low of today by the way (1.0031), and might take the profits early if the situation start looking weird, but for now it looks good.

Yeah i know it's not an eurchf trade, but those swaps are expensive and from time to time a good trade on another pair can be a huge help to sustain eurchf longs (and also to make back the floating losses that such pair is giving).

How about you, long, short?
Attached Image (click to enlarge)
Click to Enlarge Name: eja.gif Size: 32 KB
  • #6,758
  • May 10, 2012 11:22am May 10, 2012 11:22am
I agree with you. I would short it. Now its good time as US will post some good results in next weeks, I also expect USD will rise due stock market positive sentiment because of facebook IPO.
  • #6,759
  • May 10, 2012 11:43am May 10, 2012 11:43am
Quoting druckerei
I agree with you. I would short it. Now its good time as US will post some good results in next weeks, I also expect USD will rise due stock market positive sentiment because of facebook IPO.
Yes i think so, however i still keep a constant eye on eurchf, my exposure has lowered by 25% due to this other trade but eurchf continue to look more and more interesting, i think the little range will definitively break today or tomorrow, what will happen next we will see.
  • #6,760
  • May 10, 2012 11:45am May 10, 2012 11:45am
Quoting tunera
So, imports inflation now is getting high, we see that eurchf is pegged on the downside (floor) because of deflation and exports problem, on the upside we have imports inflation problems, this may explain why the snb buy at 1.20 and sell above it, scary.
This pair can really stay in this thight range for months to come, and when total inflation (as snb forecast) will grow up again, the only thing to do will be remove the floor and allow the pair to fall.

Make sense?

In other words, i'm starting to re-consider the whole buy-eurchf thing, just...
When we look at the macro scene, Asia especially China was holding up German and Swiss export strongly, USA, moderately.....could drift lower. Europe is putting negative effect on Swiss export. But the trade data just came out today in China showed a big slump in their April import. Which will be a big negative to Swiss and German export in the comming months. China is experiencing a housing bubble crash now, and it will effect a lot of their spending abilities as housing is normally the biggest asset class for a normal houshold. Swiss inflation may go up mid year due to base effect from last year, but with the macro economic scene this year, I see a deflationary scenario for the next 6~12 month. So i think its worth to hold long for now as long as the world economy is heading south.
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