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EUR/CHF

  • #9,141
  • Aug 20, 2012 11:16pm Aug 20, 2012 11:16pm
Quoting lucif
http://www.bkassetmanagement.com/aus...-minutes_2164/

I guess this might worth a look.
The SNB is diversifying their EUR reserves into AUD in last few months stated by the RBA.
Meaning is SNB unloading their EUR reserves already?
Correct me if i'm wrong
they are diversifying all the time... gbp, usd, aud, cad, dkk, etc.... and they sell EUR
  • #9,142
  • Aug 20, 2012 11:24pm Aug 20, 2012 11:24pm
Quoting didi_doedel
Money at risk:

Home loans have increased by almost 300 billion CHF in a decade and gained 5.2 percent last year to 797.8 billion francs. That’s about 140 percent of Swiss gross domestic product.

Recent interventions in the forex market have seen the SNB’s balance sheet expand to record levels. Forex reserves have risen 71 per cent of GDP.


Danger 1: Inflation

SNB's primary role is to prevent high inflation.

However, housing prices went up a lot in the past years, but rent prices did not yet increase that much. This might come soon.

Oil...
There is no inflation yet. rather deflation. worst case stagflation. SNB goal is around 2 % inflation.

Homeprices in some areas are a concern. But could be worse. Renting will become more expensive, when interests are rising. therefore we need inflation. But there is no...

SNB balance sheet is no concern. we're living in a globalized world... so wtf... SNB is holding some small parts...

i don't see your points yet... sorry
  • #9,143
  • Edited 1:02am Aug 21, 2012 12:40am | Edited 1:02am
My patience is nearly done i'm afraid.

The euro isnt exactly getting hammered and this thing cant move up

I wonder whoever it was said they think we will be at 1.25 - 1.30 by year end have they changed there mind
  • #9,144
  • Aug 21, 2012 1:26am Aug 21, 2012 1:26am
Quoting Swissie
There is no inflation yet. rather deflation. worst case stagflation. SNB goal is around 2 % inflation.

Homeprices in some areas are a concern. But could be worse. Renting will become more expensive, when interests are rising. therefore we need inflation. But there is no...

SNB balance sheet is no concern. we're living in a globalized world... so wtf... SNB is holding some small parts...

i don't see your points yet... sorry
Also if I may make another point, once an asset price bubble bursts (eg: housing) the immediate effect will be a deflationary effect on the economy.

Also I don't think that the SNB includes the price of housing in the CPI, correct me if I am wrong on that point.
  • #9,145
  • Aug 21, 2012 2:14am Aug 21, 2012 2:14am
Quoting phil3526
Also if I may make another point, once an asset price bubble bursts (eg: housing) the immediate effect will be a deflationary effect on the economy.

Also I don't think that the SNB includes the price of housing in the CPI, correct me if I am wrong on that point.
I confirm that you're wrong, see http://www.bfs.admin.ch/bfs/portal/e...icationID=3186

I agree that a bursting bubble has deflationary effect. But we haven't reached this stage yet.
  • #9,146
  • Edited 6:25am Aug 21, 2012 4:57am | Edited 6:25am
ibfx has closed my trading at 1.1944 today....

and here is ibfx answer


We do not have fixed spreads, and they generally widen during times of volatility or low liquidity. At 21:03:50, the bid price went down to 1.19944 and the ask price was at 1.20242, as shown in our tick data below:

2012.08.20 21:03:501.199441.20242
  • #9,147
  • Edited 6:59am Aug 21, 2012 6:40am | Edited 6:59am
Quoting brinks
My patience is nearly done i'm afraid.

The euro isnt exactly getting hammered and this thing cant move up

I wonder whoever it was said they think we will be at 1.25 - 1.30 by year end have they changed there mind
deflation situation, no inflation on the foreseeable future (ok there are risks but who cares until the current task isnt properly addressed), lower intervention weekly (3bln this week), if the ECB starts intervention to lower Italy and Spain yields then I think we'll see net offloading on weekly bases. from that point SNB has the incentive to offload on higher price level... I wouldnt throw the towel in now but just my 2 cents.
  • #9,148
  • Aug 21, 2012 7:02am Aug 21, 2012 7:02am
Quoting didi_doedel
Money at risk:

Home loans have increased by almost 300 billion CHF in a decade and gained 5.2 percent last year to 797.8 billion francs. That’s about 140 percent of Swiss gross domestic product.

Recent interventions in the forex market have seen the SNB’s balance sheet expand to record levels. Forex reserves have risen 71 per cent of GDP.


Danger 1: Inflation

SNB's primary role is to prevent high inflation.

However, housing prices went up a lot in the past years, but rent prices did not yet increase that much. This might come...
hi didi, sorry to say and no insult at all, but for me
its a kind of argument that currently my house is burning(deflation) but in a couple of months there's maybe a risk of flood (inflation) so better prepare for the flood (it will cease the fire), and no problem of the current fire, isn't it?
  • #9,149
  • Aug 21, 2012 7:23am Aug 21, 2012 7:23am
Quoting pipxster
deflation situation, no inflation on the foreseeable future (ok there are risks but who cares until the current task isnt properly addressed), lower intervention weekly (3bln this week), if the ECB starts intervention to lower Italy and Spain yields then I think we'll see net offloading on weekly bases. from that point SNB has the incentive to offload on higher price level... I wouldnt throw the towel in now but just my 2 cents.
Thanks pipxster I will wait until mid end of september before i close my positions.
  • #9,150
  • Aug 21, 2012 9:46am Aug 21, 2012 9:46am
Quoting pipxster
hi didi, sorry to say and no insult at all, but for me
its a kind of argument that currently my house is burning(deflation) but in a couple of months there's maybe a risk of flood (inflation) so better prepare for the flood (it will cease the fire), and no problem of the current fire, isn't it?
SNB gave up their last unofficial peg in June 2010 when inflation was going down from 1.40% peak to 0,49%.

So SNB will not wait for inflation of >2%.

And in the last 6 months (i.e. Feb-now) inflation became slightly positive in Switzerland. So the first drops of the flood are already there.

Say, if real estate rent price just go up by 5% and this counts into CPI by 20%, this would be enough to increase CPI by 1% only for that and inflation would be over 1%.

Of course 1% is still extremely low, but consider the effect to those betting against SNB.

In conclusion: if markets consider that 1.20 is way too high, then it can't survive for long periods.
  • #9,151
  • Aug 21, 2012 11:39am Aug 21, 2012 11:39am
Thanks alaneth, brinks.
namesnaw you mean 1.19944? Between 20.59-21.03 at IBFX there is no trade I dont know why.
  • #9,152
  • Aug 21, 2012 12:07pm Aug 21, 2012 12:07pm
Another dogsh#t close today
  • #9,153
  • Aug 21, 2012 1:57pm Aug 21, 2012 1:57pm
Quoting didi_doedel
SNB gave up their last unofficial peg in June 2010 when inflation was going down from 1.40% peak to 0,49%.

So SNB will not wait for inflation of >2%.

And in the last 6 months (i.e. Feb-now) inflation became slightly positive in Switzerland. So the first drops of the flood are already there.

Say, if real estate rent price just go up by 5% and this counts into CPI by 20%, this would be enough to increase CPI by 1% only for that and inflation would be over 1%.

Of course 1% is still extremely low, but consider the effect to those betting against...

I agree with you completely. SNB won't wait to see a >2% inflation to give up. By the moment don't expect SNB will raise the floor or give up. But I believe that there's going to be a spike below 1,20, like the 200 seconds spike to 1,2080. Ok, SNB is defending the floor with billions of francs... but you will see it. Maybe next month with euro problems. And even if the floor remains some months more, swiss franc cannot devaluate further. Market Knows it. Only it devaluated when market expected that Hilldebrand could raise the floor. Now it won't happen, specially with the eurosceptic Jordan. On the contrary, SNB will offload euros in every chance. It is a peg that someday will be broken because SNB has only a mandate: price stability.

And don't trust in brokers. They are gonna wipe out your accounts with official or invented spikes. And next month or before there will not be positive swaps for longs

Good luck!

(buy cheap put options on EURCHF. Jordan won't warn you)
  • #9,154
  • Edited 8:39pm Aug 21, 2012 8:15pm | Edited 8:39pm
I didnt think jordan was a euro sceptic?

How about we may even start seeing the reverse of what used to happen before the SNB monetary meeting people start selling in case of removal of the floor.

I know we have spoken about the low liquidity spikes but one of my brokers who was previously very good is now starting to spike every night it is making nervous.
  • #9,155
  • Aug 21, 2012 8:41pm Aug 21, 2012 8:41pm
Quoting qatar
I agree with you completely. SNB won't wait to see a >2% inflation to give up. By the moment don't expect SNB will raise the floor or give up. But I believe that there's going to be a spike below 1,20, like the 200 seconds spike to 1,2080. Ok, SNB is defending the floor with billions of francs... but you will see it. Maybe next month with euro problems. And even if the floor remains some months more, swiss franc cannot devaluate further. Market Knows it. Only it devaluated when market expected that Hilldebrand could raise the floor. Now it won't...

In my opinion, while price stability may be a mandate, a falling eurchf will severely impact the Swiss export industry, including employment in that industry. And also, in a world of debt deflation and policies to protect employment at home, I think that they may prioritize protecting exports vs inflation. Only when inflation runs at a rate higher than what they are comfortable with will they even consider altering the floor.

But even if inflation did start to accelerate, I personally believe that they won't change the floor.

They went to the trouble of implementing the floor as it seemed to be a last resort when their other interventions failed. I don't think they will remove the floor for many many years.

I tend to weigh towards the idea of the floor being being raised to 1.30 or around that mark. That's why I hold long eurchf positions. That one event could make me a killing with a limited downside. I think that they will protect the 1.2000 level completely, aside from some technical breaches.
  • #9,156
  • Aug 22, 2012 1:02am Aug 22, 2012 1:02am
Quoting kdeurhj
Thanks alaneth, brinks.
namesnaw you mean 1.19944? Between 20.59-21.03 at IBFX there is no trade I dont know why.
It is a good thing to have no trade between 20.59-21.03 ! It is a time of low liquidity and if there are trades, major spikes probably below 1.2000 will happen & spread will increase a lot.

There are many brokers that block out trade during this time. Brokers who don't will have charts like that...
Attached Image (click to enlarge)
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  • #9,157
  • Aug 22, 2012 1:51am Aug 22, 2012 1:51am
wtf whos ur broker? those spikes down are stupid..i dont have em
Quoting alaneth
It is a good thing to have no trade between 20.59-21.03 ! It is a time of low liquidity and if there are trades, major spikes probably below 1.2000 will happen & spread will increase a lot.

There are many brokers that block out trade during this time. Brokers who don't will have charts like that...
Early to bed, early to rise, keeps you healthy, wealthy and wise.
  • #9,158
  • Aug 22, 2012 2:11am Aug 22, 2012 2:11am
Quoting didi_doedel
SNB gave up their last unofficial peg in June 2010 when inflation was going down from 1.40% peak to 0,49%.

So SNB will not wait for inflation of >2%.

And in the last 6 months (i.e. Feb-now) inflation became slightly positive in Switzerland. So the first drops of the flood are already there.

Say, if real estate rent price just go up by 5% and this counts into CPI by 20%, this would be enough to increase CPI by 1% only for that and inflation would be over 1%.

Of course 1% is still extremely low, but consider the effect to those betting against...
2010 peg is quite a different story... I think you can forget about this... 1.50 was way too high to intervene. Looking back to it, it seems like it was sort of a joke then. But at 1.20 is a level, underneath swiss economy is hurt very much and in case of lower rates vs. EUR, switzerland is facing deflationary-pressure again. PPP seems to be somewhere at 1.30 - 1.40. I don't think that ppp was at 1.60, when SNB Intervened in 2010. Now we have deflation, in 2010 we had inflation. SNB is working towards inflation... no idea when it's going to arrive... Food still getting cheaper in CH and in relation to german food, prices are still too high. As long as EURCHF will not get higher (less attraction in buying stuff abroad) or swiss food prices get lower (more deflational risk) in my view SNB has to keep 1.20.

Could please you give a source, where we can see that inflation (Feb to Jul) is positive? I can only find that... http://www.bloomberg.com/quote/SZCPIMOM:IND

rent prices will go up, when the reference interest rate is going up. No reason to see that, as long as interest rates are not allowed to rise...

maybe in shortterm, 1.20 is high, but i still see the swiss economy in an environment, where the economy is steadily cooling down. banking sector restructuring, EURO-land-sales decrease, less tourists, etc...)

only my 37 cents
  • #9,159
  • Aug 22, 2012 3:26am Aug 22, 2012 3:26am
Quoting qatar
I agree with you completely. SNB won't wait to see a >2% inflation to give up. By the moment don't expect SNB will raise the floor or give up. But I believe that there's going to be a spike below 1,20, like the 200 seconds spike to 1,2080. Ok, SNB is defending the floor with billions of francs... but you will see it. Maybe next month with euro problems. And even if the floor remains some months more, swiss franc cannot devaluate further. Market Knows it. Only it devaluated when market expected that Hilldebrand could raise the floor. Now it won't...
ok, I know that you are skeptical but I would ask the "remove the floor" team that what comes after a supposed floor removal? never heard a feasible answer.

0,8-0,9 EURCHF ? that would erase whole Swland from the map. or 1,1 peg? than they could intervene printing 20 BLN a week after giving such a bonus for short players.

so whats the next step?
  • #9,160
  • Aug 22, 2012 3:32am Aug 22, 2012 3:32am
0552 GMT [Dow Jones] Swiss weekly sight deposit rise is benign, says UBS. It suggests the pressure on the Swiss National Bank to defend its CHF1.20-per-euro floor has eased in recent weeks, compared to May and June. "We are aware the pressure on the SNB can re-emerge when moving closer towards its quarterly monetary policy assessment in mid-September, but the small increase in franc sight deposits at the SNB last week suggests markets aren't looking for a softening of the lower boundary in EUR/CHF just now," says economist Reto Huenerwadel. The EUR/CHF is trading at 1.2007. ([email protected])
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