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EUR/CHF

  • #7,721
  • Jun 13, 2012 4:02am Jun 13, 2012 4:02am
http://stats.oecd.org/Index.aspx?DataSetCode=CPL#

Just had a look on that.

It shows the Comparative Price Levels between the OECD countries.
When I have seen right the Swiss can buy a consumer basket worth 100 CHF in Switzerland for 61 CHF in Germany.

With an actual EUR/CHF at 1.2 that means you have to pay for the basket in Germany 50.83 EUR

So the PPP (Purchasing power parity) would be EUR/CHF at 1.9673 (100/50.83)

I don't know why we see in the press figures for ppp at 1.35 - 1.40.
Where are these figures coming from?

Is anything wrong in my calculation!!!
  • #7,722
  • Jun 13, 2012 4:06am Jun 13, 2012 4:06am
Quoting zoran22
any one seen after election that winning party changes rhetoric fast and dramatically...

but i really don't see a problem with enormous fx reserves (it is a dream of every CB but SNB now) at least loosing fx balances is easy...
(buying loosing bonds italy, spain, greece!!! or just buying and selling fx, bonds stocks.. and loosing the bid ask spread all the time)
so they can reduce reserves at any time

as a problem of to much CHF monetary base SNB can always enlarge min bank reserves in that currency and multiplicator factor does the rest...
Agree to a certain level, we actually do see some export oriented emergin Asian countries holding very large foreign reserve/GDP ratio for many years and it worked fine.

But i think export earned money and safe heaven inflow/outflow is still a bit different in many ways......
  • #7,723
  • Jun 13, 2012 4:20am Jun 13, 2012 4:20am
Quoting Kfp
http://stats.oecd.org/Index.aspx?DataSetCode=CPL#

Just had a look on that.

It shows the Comparative Price Levels between the OECD countries.
When I have seen right the Swiss can buy a consumer basket worth 100 CHF in Switzerland for 61 CHF in Germany.

With an actual EUR/CHF at 1.2 that means you have to pay for the basket in Germany 50.83 EUR

So the PPP (Purchasing power parity) would be EUR/CHF at 1.9673 (100/50.83)

[font=Verdana]I...
Thanks, good info, but i think its not just about comparative price levels, swiss chf has been the most expensive currency for years, its about whether a country's economy and its industrial sturcture/type can cope with it or not, so, eventually we still need the Swiss PMI, export to slump and unempolyment rate to go up.....
  • #7,724
  • Jun 13, 2012 4:25am Jun 13, 2012 4:25am
Quoting sdpadres
does the lack of any move today before tomorrow's meeting mean that the specs are totally gone from this pair? If so, looks like we will test 1.2000 again is the SNB does nothing tomorrow.
yap... looks like tomorrow might be a disappointing. it is because Jordan and SNB has managed the peg very poorly, no one believes them anymore.
  • #7,725
  • Jun 13, 2012 4:34am Jun 13, 2012 4:34am
Quoting tim10167
Agree to a certain level, we actually do see some export oriented emergin Asian countries holding very large foreign reserve/GDP ratio for many years and it worked fine.

But i think export earned money and safe heaven inflow/outflow is still a bit different in many ways......
There is absolutely no problem with holding large foreign reserve/GDP ratio. Even if it exceeds 100%, I don't see a problem. It's just like saving money in the bank. The more, the better.

For Switzerland, all the inflows are good although it pushes eurchf down & SNB intervenes by printing more CHF. Who says SNB loses money? - nonsense. As long as the currency is backed by a strong government, the value of the currency is high. Now SNB wants to devalue the CHF, so it prints more, but in a reasonable amount. Then use CHF to buy EUR.

Nett - Switzerland is making more money just by printing it.!
  • #7,726
  • Jun 13, 2012 4:42am Jun 13, 2012 4:42am
actually Jordan is doing very good job. The Hedgefunds are very nervous right now.What you think will happen, when the hedgefuns star to close short positions?
Quoting tim10167
yap... looks like tomorrow might be a disappointing. it is because Jordan and SNB has managed the peg very poorly, no one believes them anymore.
  • #7,727
  • Jun 13, 2012 4:59am Jun 13, 2012 4:59am
Quoting alaneth
There is absolutely no problem with holding large foreign reserve/GDP ratio. Even if it exceeds 100%, I don't see a problem. It's just like saving money in the bank. The more, the better.

For Switzerland, all the inflows are good although it pushes eurchf down & SNB intervenes by printing more CHF. Who says SNB loses money? - nonsense. As long as the currency is backed by a strong government, the value of the currency is high. Now SNB wants to devalue the CHF, so it prints more, but in a reasonable amount. Then use CHF to buy EUR.

Nett - Switzerland...
Natural export earned money may only increase a few percentage of its foreign reserve/GDP every year. But if u compare the size of EU and Switzerland, the inflow caused by rapid safe heaven inflow could cause 50%~100% foreign reserve/GDP "every" year, if not because of the peg, we may even see 200%+in a year, then it is not fun.....
  • #7,728
  • Jun 13, 2012 5:04am Jun 13, 2012 5:04am
Quoting Fxworld
actually Jordan is doing very good job. The Hedgefunds are very nervous right now.What you think will happen, when the hedgefuns star to close short positions?
I think it will only cause a small pop, as too many "long warriors" have lost faith in SNB and will rush to close their long position, SNB will offload EURO too, very heavy. Thats why everyone in this forums is hoping for policy intervention.....the real SNB action.
  • #7,729
  • Jun 13, 2012 5:17am Jun 13, 2012 5:17am
Do you know what is a bank run? Soon or later you will see what is a panic button (buy)


http://upload.wikimedia.org/wikipedi..._Sparkasse.jpg
Quoting tim10167
I think it will only cause a small pop, as too many "long warriors" have lost faith in SNB and will rush to close their long position, SNB will offload EURO too, very heavy. Thats why everyone in this forums is hoping for policy intervention.....the real SNB action.
  • #7,730
  • Jun 13, 2012 5:18am Jun 13, 2012 5:18am
Quoting tim10167
I think it will only cause a small pop, as too many "long warriors" have lost faith in SNB and will rush to close their long position, SNB will offload EURO too, very heavy. Thats why everyone in this forums is hoping for policy intervention.....the real SNB action.
Looking at the pair today it seems like nobody is expecting the SNB to do anything.
  • #7,731
  • Jun 13, 2012 5:30am Jun 13, 2012 5:30am
Quoting Fxworld
Do you know what is a bank run? Soon or later you will see what is a panic button (buy)


http://upload.wikimedia.org/wikipedi..._Sparkasse.jpg
Thats why capital controls may be SNB's last card on hand
  • #7,732
  • Jun 13, 2012 5:40am Jun 13, 2012 5:40am
I bet tomorrow SNB will use the word "outmost determination" again, but the difference is it will attract no more long warriors this time. I even have doubts whether it will scare the shorts away. poor cap management....
  • #7,733
  • Jun 13, 2012 5:42am Jun 13, 2012 5:42am
Quoting tim10167
I bet tomorrow SNB will use the word "outmost determination" again, but the difference is it will attract no more long warriors this time. I even have doubts whether it will scare the shorts away. poor cap management....
They may surprise everyone

by bringing in captal controls,negative rates and lift the floor to 1.40
  • #7,734
  • Jun 13, 2012 5:45am Jun 13, 2012 5:45am
"We will defend the peg with utmost determination"

I exept nothing from tomorrow, and also the market do.
  • #7,735
  • Jun 13, 2012 5:50am Jun 13, 2012 5:50am
Quoting brinks
They may surprise everyone

by bringing in captal controls,negative rates and lift the floor to 1.40
  • #7,736
  • Jun 13, 2012 5:57am Jun 13, 2012 5:57am
Quoting tim10167
I bet tomorrow SNB will use the word "outmost determination" again, but the difference is it will attract no more long warriors this time. I even have doubts whether it will scare the shorts away. poor cap management....
And then what do they think at SNB they will sit and wait like a lame duck and swell more and more EUR by force feeding? CPI,PPI all far below target
OK domestic economy doing good but why? printed CHF flowing back to economy and makes the boom. Expect even more f**ked up trade balance data - if it slides to the negative side more and more is that a game changer (means that the real economy can not finance the "unhealthy" internal boom).?

Are they really so lame like that?

If they lower the floor (now peg) to 1,1 then they will reward all short players who will demand 1,0 floor in couple of months+loose a lot of money on 300 BLN EUR immediately.

Now the lane is clear for floor rise to 1,25 as no one expects it (to punish the inflow + address the CPI ppi problem + earn a lot of money) dont think at all that if there would be more printing with 1,25 I would rather think with 1,1 floor they can print more CHF each minute.

So my advice to SNB for tomorrow

- raise the floor to 1,25 (to address CPI,PPI, earn money, punish the inflow so far)
- introduce capital controls + verbal hint for 1,3 in one year to prevent or reduce further inflow

let me quote alexcee here:

"Jordan, please."
  • #7,737
  • Jun 13, 2012 5:59am Jun 13, 2012 5:59am
Mates, BREAKING:

Steve Collins‏@TradeDesk_Steve
"Bundesbank Considers Buying Australian Dollars"

If Germans do this because they are preparing to allow "much lower" EURO for the sake of other troubled nations. We might have an issue with the peg....
  • #7,738
  • Jun 13, 2012 6:02am Jun 13, 2012 6:02am
Quoting brinks
They may surprise everyone

by bringing in captal controls,negative rates and lift the floor to 1.40
swear to drunk Im not a god, but haven'nt read you post as I wrote mine, with the same advice.

for me it would be enough 1,25 with hint to 1,3 (then credible) to attract further long warriors so SNB could relax

+me too
  • #7,739
  • Jun 13, 2012 6:03am Jun 13, 2012 6:03am
Quoting pipxster
And then what do they think at SNB they will sit and wait like a lame duck and swell more and more EUR by force feeding? CPI,PPI all far below target
OK domestic economy doing good but why? printed CHF flowing back to economy and makes the boom. Expect even more f**ked up trade balance data - if it slides to the negative side more and more is that a game changer (means that the real economy can not finance the "unhealthy" internal boom).?

Are they really so lame like that?

If they lower the floor (now peg) to 1,1 then they will reward all...
  • #7,740
  • Jun 13, 2012 6:06am Jun 13, 2012 6:06am
Quoting tim10167
Mates, BREAKING:

Steve Collins‏@TradeDesk_Steve
"Bundesbank Considers Buying Australian Dollars"

If Germans do this because they are preparing to allow "much lower" EURO for the sake of other troubled nations. We might have an issue with the peg....
Allow much lower EURO? I think it is not the question if the Germans want it or allow it but if the FED or other CBs let it. The answer I think: NO
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