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EUR/CHF

  • #8,981
  • Aug 8, 2012 3:34pm Aug 8, 2012 3:34pm
let me repost from april with some adjustments

for me is simple as is:

Q:what is the monetary policy of SNB
A:inflation targeting (no double mandate like FED!)

Q:what is the inflation target of SNB
A:2%

Q:what is the current YoY inflation in SwLand almost after a year of introducing the famous floor?
A:-0,7%

Q:accelerating ?
A:yes, each month so far except august (since the introduction of the famous "floor")

Q:what measurements elaborated the responsible authority (SNB) so far to reach the inflation target?
A:NOTHING (soaking up EUR)
  • #8,982
  • Aug 8, 2012 4:09pm Aug 8, 2012 4:09pm
NEW YORK, Aug 8 (Reuters) - An error by a U.S.-based trader
at RBS Securities caused a sharp and unexpected rise in the euro
against the Swiss franc on Monday, a spokesman for the bank told
Reuters.
The transaction caused a stir because it triggered a wave of
computer-generated, or algorithmic trades from other banks. It
took place on the EBS foreign exchange platform and briefly
pushed the euro up near a five-month high against the Swiss
franc.
The mistake occurred amid heightened concern over market
mishaps after computer trading gone awry in the U.S. stock
market nearly caused Knight Capital Group Inc to go
under. However, an RBS spokesman said the incident was contained
with quick action.
"It was immediately spotted and immediately corrected." The
spokesman added that "there was no client money involved."
The spokesman, however, declined to comment on whether RBS
lost or gained money on the trade.
EBS daily charts showed that the euro surged to
1.20928 francs from around 1.2015 within three minutes (2012 GMT
to 2015 GMT) on Monday as the algorithmic orders were executed.
The euro soon dropped back down and was at 1.2014 francs
late on Wednesday, continuing to hold just above the Swiss
National Bank-imposed floor of 1.20 francs.
When the incident happened, traders had speculated that it
was a faulty algorithmic system at RBS that caused the run-up in
the euro, although that turned out to be not the case.
"RBS algo went berserk," said one UK-based trader at the
time it happened.
Another trader, who spoke to Reuters on Monday, had the
impression that an RBS algo took euro/Swiss franc from the
1.2015 level to the 1.2050 bid, and then the U.S. algorithmic
systems took over.
As a result of the spike in euro/Swiss, there was a lot of
confusion as to whether the high of 1.20928 francs was valid.
That prompted EBS to issue a statement to traders late on
Monday.
"Given the nature of the move, there was a lot of dispute as
to what the exact high was with different shops calling it
anything from 1.2020 to 1.2067," a trader said.
EBS said that the euro spike against the Swiss franc late
Monday was valid and that the high print of 1.20928 would stand.
It was a rare dose of activity for a pair that for months
has traded in a narrow range due to the SNB floor.
The SNB in September set a floor of 1.20 francs against the
euro, which means that euro/Swiss franc pair cannot go below
that level without meeting stiff resistance from the central
bank.
The SNB set this limit in September after the euro zone
crisis prompted investors to seek a haven in the franc. A strong
franc has hurt Swiss exporters.
"That was quite a bit of excitement on euro/Swiss franc on
Monday," said Michael Woolfolk, senior currency strategist, at
BNY Mellon In New York. "From the price behavior of the last
several months, Monday's move was certainly noteworthy."
  • #8,983
  • Aug 8, 2012 4:13pm Aug 8, 2012 4:13pm
Quoting holmes
you know, it sucks. my buy stops triggered and now trapped in mandatory patience,
Now you're stuck between a rock and the SNB. lol
  • #8,984
  • Aug 8, 2012 4:18pm Aug 8, 2012 4:18pm
Quoting alesss
NEW YORK, Aug 8 (Reuters) - An error by a U.S.-based trader
at RBS Securities caused a sharp and unexpected rise in the euro
against the Swiss franc on Monday, a spokesman for the bank told
Reuters.
The transaction caused a stir because it triggered a wave of
computer-generated, or algorithmic trades from other banks. It
took place on the EBS foreign exchange platform and briefly
pushed the euro up near a five-month high against the Swiss
franc.
The mistake occurred amid heightened concern over market
mishaps after computer trading gone...
I remember I read an article in forexfactory that it wasn't a mistake and the trade is going to stay. Besides, on my MT it happened in less than a minute.
  • #8,985
  • Aug 8, 2012 4:22pm Aug 8, 2012 4:22pm
Quoting EmeraldEyes
Now you're stuck between a rock and the SNB. lol
ya, that's right. you know what, I still don't know why the spike happened and I guess it would be better to count all probable reasons although some might seem silly.
  • #8,986
  • Aug 8, 2012 4:28pm Aug 8, 2012 4:28pm
Quoting alesss
NEW YORK, Aug 8 (Reuters) - An error by a U.S.-based trader
at RBS Securities caused a sharp and unexpected rise in the euro
against the Swiss franc on Monday, a spokesman for the bank told
Reuters.
The transaction caused a stir because it triggered a wave of
computer-generated, or algorithmic trades from other banks. It
took place on the EBS foreign exchange platform and briefly
pushed the euro up near a five-month high against the Swiss
franc.
The mistake occurred amid heightened concern over market
mishaps after computer trading gone...
My bad if they pushed to 60 then sold at 90 then they may have got in on a top and it wouldve been on purpose
  • #8,987
  • Aug 8, 2012 4:33pm Aug 8, 2012 4:33pm
Quoting sidhujag
My bad if they pushed to 60 then sold at 90 then they may have got in on a top and it wouldve been on purpose
WHOEVER would ever believe it was a mistake?
  • #8,988
  • Aug 8, 2012 4:34pm Aug 8, 2012 4:34pm
Quoting holmes
I remember I read an article in forexfactory that it wasn't a mistake and the trade is going to stay.
there have been too many mistakes this year, because the same spike happened on january and they said that it was another mistake. I don't believe them. too many errors to be true
  • #8,989
  • Aug 8, 2012 4:39pm Aug 8, 2012 4:39pm
Quoting alesss
there have been too many mistakes this year, because the same spike happened on january and they said that it was another mistake. I don't believe them. too many errors to be true
a mistake of several billions, by a trader in market closed time, all nonsense.
  • #8,990
  • Aug 8, 2012 4:50pm Aug 8, 2012 4:50pm
Quoting holmes
WHOEVER would ever believe it was a mistake?
Flash crash was a mistake
  • #8,991
  • Aug 8, 2012 4:51pm Aug 8, 2012 4:51pm
Quoting holmes
a mistake of several billions, by a trader in market closed time, all nonsense.

If I had a bank account with RBS, I would take out all money tomorrow. RBS may have lost a lot of money
  • #8,992
  • Edited 5:27pm Aug 8, 2012 4:54pm | Edited 5:27pm
The question is" which one is more solid? the floor or ceiling, why when the Euro moves for 200 pips against all peers nothing happens on this pair but once by a mistake of a trader it pops 70 pips, what if this trader had gone short on this pair? Would it drive the pair for several hundred pips?"
  • #8,993
  • Aug 8, 2012 5:34pm Aug 8, 2012 5:34pm
Quoting holmes
The question is" which one is more solid? the floor or ceiling, why when the Euro moves for 200 pips against all peers nothing happens on this pair but once by a mistake of a trader it pops 70 pips, what if this trader had gone short on this pair? Would it drive the pair for several hundred pips?"
because retialers would make money and banks would lose... they will never let retailers win. When retailers go short it will go up, until then wiating for more ppl to come on board so that they can ride off of others accounts.
  • #8,994
  • Aug 8, 2012 7:34pm Aug 8, 2012 7:34pm
Quoting holmes
ya, that's right. you know what, I still don't know why the spike happened and I guess it would be better to count all probable reasons although some might seem silly.
It happened bc it had to happen. Like the spike in May and June. The order structure in E/C since the peg is very one-sided. The only mistake was someone selling too much Chf during an illiquid time (NY afternoon I believe) and tripping a cascade of market orders in E/C. Algos correct them fast, but there is usually a few minutes where you can get a really good price from your broker if you're quick! Like a good long Chf/Jpy or short G/Chf.
  • #8,995
  • Aug 8, 2012 7:45pm Aug 8, 2012 7:45pm
Quoting holmes
The question is" which one is more solid? the floor or ceiling, why when the Euro moves for 200 pips against all peers nothing happens on this pair but once by a mistake of a trader it pops 70 pips, what if this trader had gone short on this pair? Would it drive the pair for several hundred pips?"
A large order (along with a ton of buy stops) can pop it up high enough until all buyers are paired with a seller. Price may run up 100pips to satisfy all market orders.

A large sell order must absorb all waiting buyers for price to move down. That means that right now it must absorb all buyers at 1.20 to move lower. The SNB's desks are waiting there w/ an 'unlimited' amount of Chf/Eur to sell (E/C buy).

Higher price is the path of least resistance and that's where we'll see the spikes happen. The spikes will happen randomly so its a gamble still.
  • #8,996
  • Aug 8, 2012 10:00pm Aug 8, 2012 10:00pm
My buy stops got triggered and I am sad however I know it's a matter of time, the SNB has indicated that CHF is overvalued and their policy is to weaken that, while ECB declared that it is wrong to bet against the EURO therefor going long on this pair seems very reasonable.
  • #8,997
  • Edited 3:16am Aug 9, 2012 2:49am | Edited 3:16am
Quoting holmes
My buy stops got triggered and I am sad however I know it's a matter of time, the SNB has indicated that CHF is overvalued and their policy is to weaken that, while ECB declared that it is wrong to bet against the EURO therefor going long on this pair seems very reasonable.
What i find worrying is we never hear anything from the SNB and the say the franc is overvalued against the euro but on any upmove they are selling into it.

It would be easy for the SNB to move this up in these thin holiday markets.
  • #8,998
  • Aug 9, 2012 3:19am Aug 9, 2012 3:19am
Quoting brinks
What i find worrying is we never hear anything from the SNB and the say the franc is overvalued against the euro but on any upmove they are selling into it.
Sure they do, Switzerland is a small country and the SNB has never had this amount of reserve, although Jordan believes in theory the amount can be unlimited, they are not used to holding that amount of reserve and it makes them worried, I believe they and political parties will get used to that and understand it is not that bad to raise the reserve as far as there is no risk of inflation. As I said before for price stability they will need to get further steps and with EUR/[email protected] and EurChf 1.2, Chf is still about 35 percent overvalued. So the demand of market is trying to drive it to parity while the fair price drives it to 1.5, in the case of changing fundamentals in EZ, whether worsening or recovery the rate will rise.
  • #8,999
  • Aug 9, 2012 3:22am Aug 9, 2012 3:22am
Quoting holmes
Sure they do, Switzerland is a small country and the SNB has never had this amount of reserve, although Jordan believes in theory the amount can be unlimited, they are not used to holding that amount of reserve and it makes them worried, I believe they and political parties will get used to that and understand it is not that bad to raise the reserve as far as there is no risk of inflation. As I said before for price stability they will need to get further steps and with EUR/[email protected] and EurChf 1.2, Chf is still about 35 percent overvalued. So the...
can i asked what price your buy stops got filled at the other day?
  • #9,000
  • Aug 9, 2012 3:28am Aug 9, 2012 3:28am
Quoting brinks
can i asked what price your buy stops got filled at the other day?
some 1.2037 and the rest 1.2072.
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