- #8,775
- Jul 29, 2012 9:30am Jul 29, 2012 9:30am
I sum up the situation with EURCHF as follows:
1. The 1.2000 is likely to hold for years to come due to the problems in the Eurozone, and due to the swiss wanting to protect their exports to the eurozone.
2. If anything, there is the chance that they might move the floor up beyond the 1.20 level.
3. The chances of the 1.20 floor being breached (aside from the technical breach that occurred a little while ago) is unlikely.
4. If your broker pays positive swap, and has a low spread then this is an idea currency to trade.
5. Taking a long position...
I think this 1.20 peg will stay for a long long time until EU crisis is over - but that'll be years. I forsee the global economy to slow & enter a recession, so safe havens will prevail & SNB has to maintain the peg by unlimited EUR purchases. SNB has a reputation to maintain and 1.20 will not be breached. Remember 4th April where it was breached? Jordan was forced to give a press statement on it!
I've been long since Sept 2011 & I will continue to do so indefinitely. Who knows one day trading eurchf can earn me my bread & butter, so I can quit my job
. Say if we have 10 lots, then the swap (on EXness or AVA) can make me €15 per nite. We can use high leverage and 'compounding interest' to double my equity in 6 months. Provided ECB don't cut rates anymore...
- #8,776
- Jul 29, 2012 10:05am Jul 29, 2012 10:05am
I also think the same, but I expect cap controls or some surprise soon by SNB which will temporarily spike the pair.
I think this 1.20 peg will stay for a long long time until EU crisis is over - but that'll be years. I forsee the global economy to slow & enter a recession, so safe havens will prevail & SNB has to maintain the peg by unlimited EUR purchases. SNB has a reputation to maintain and 1.20 will not be breached. Remember 4th April where it was breached? Jordan was forced to give a press statement on it!
I've been long since Sept 2011...
Another issue that isn't an issue at the moment is inflation. The latest reading was -0.3%.Will they go lower than 0.75%? I am hoping that they won't. But I think they may keep rates on hold. They just cut recently, and I think they must have to realise that cutting rates to 0.25% won't really help the eurozone.
This article was interesting:
"Cutting the deposit rate the European Central Bank offers lenders in the euro zone below zero is an option, ECB Executive Board Member Benoit Coeure said on Friday. Speaking in Mexico, Coeure said the bank needed to take the rate down 25 basis points to zero to match its cut in the reference rate. He said policymakers would need to consider whether it could take the deposit rate below zero, which would mean the central bank would start charging banks for the privilege of parking spare cash in the ECB."
They might instead of lowering the interest rate, might lower the deposit rate the ECB offers to lenders instead. Hopefully doing that will occupy their attention...