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EUR/CHF

  • #9,261
  • Edited 10:43pm Aug 28, 2012 10:23pm | Edited 10:43pm
Quoting phil3526
Could be. But also, could it be a relative lack of liquidity in this pair.

The price on my exness ecn account hasn't gone below 1.20076 in the past 8 days at least.

The price on my exness mini account however yesterday spiked down to 1.20021 though.
I'm sure the brokers will say low liquidity is the problem.

Maybe it is.
  • #9,262
  • Aug 28, 2012 11:19pm Aug 28, 2012 11:19pm
I did read something yesterday saying the SNB had nearly finished diversifying there euro holdings.

That coupled with slowing inflows could mean a bit of upside to come.
  • #9,263
  • Aug 29, 2012 6:50am Aug 29, 2012 6:50am
Inflation in Germany increases due to fuel prices
http://news.ninemsn.com.au/article.aspx?id=8524334

Let's see for Switzerland.
  • #9,264
  • Aug 29, 2012 7:40am Aug 29, 2012 7:40am
Although I'm out of this pair now I'm still checking it and have had another nasty spike down on my alpari uk account today more or less exactly the same as yesterday.

Below 1.20
  • #9,265
  • Aug 29, 2012 8:23am Aug 29, 2012 8:23am
Quoting Napoleon180
I think the only option for somebody to short this pair could be to consider that the euro will fail itself.
The peg will never be lowered as it would be suicide for themselves.

I'm still holding all my longs...

Not necessary to see a eurozone break-up to see EURCHF below 1,19. I am not short yet, but this will be the short of the second half of the year. Jordan is no longer pronouncing "overvalued" (correct me if I'm wrong, but at least for sure he is not using "massively", as Hilldebrand). He says intervention cannot last forever. It’s not for “eternity”. In fact, it’s only a “policy under extreme circumstances”. When circumstances are not so extreme (October , November), peg will be abandoned, acknowledging that “due to its efforts to prevent the franc from rising”, it could “suffer losses on the foreign exchange reserves it's building up”

Longs have no longer any sense in this pair, because once Jordan abandons this policy, market will feel free falling to below parity. Under this new scenario, spikes are impossible. Well, spikes below 1,2000 are feasible (in all brokers).
  • #9,266
  • Edited 10:32am Aug 29, 2012 9:29am | Edited 10:32am
Quoting qatar
[font=&quot]Not necessary to see a eurozone break-up to see EURCHF below 1,19. I am not short yet, but this will be the short of the second half of the year. Jordan is no longer pronouncing "overvalued" (correct me if I'm wrong, but at least for sure he is not using "massively", as Hilldebrand). He says intervention cannot last forever. It’s not for “eternity”. In fact, it’s only a “policy under extreme circumstances”. When circumstances are not so extreme (October , November), peg will be abandoned, acknowledging that “due to its efforts to...
So your not accounting for any improvement in the euro?

The SNB are targeting price stability if they the remove the floor don't you think the pair would
plummet?

And if the amount they are having to intervene has slowed which it has why would they remove the floor?

Having said all that I really don't think there will be any upside other than spikes in this pair.
  • #9,267
  • Aug 29, 2012 10:38am Aug 29, 2012 10:38am
Hello guys, is anybody use 4xp broker?? swap for Longs is 0 now but there is no spikes, 300 levarage, 4 pips spread on EUR/CHF, and they give 50% bonus if you put 5000$ you got 7500$.
  • #9,268
  • Aug 29, 2012 11:22am Aug 29, 2012 11:22am
Quoting brinks
So your not accounting for any improvement in the euro?

The SNB are targeting price stability if they the remove the floor don't you think the pair would
plummet?

And if the amount they are having to intervene has slowed which it has why would they remove the floor?

Having said all that I really don't think there will be any upside other than spikes in this pair.
Deflation "probably" will finish in few months. Then or sooner peg will be removed. Of course the pair would plummet, even if Eurocrisis was fixed (not main scenario). Then if deflation threatened SERIOUSLY again price stability (not very likely with CHF expanded monetary base & realstate boom), SNB would intervene with a lower PEG (at around parity).

And if the amount they are having to intervene has slowed which it has why would they remove the floor?

Because it is an EXCEPTIONAL & TEMPORARY measure, according to Jordan
  • #9,269
  • Aug 29, 2012 11:36am Aug 29, 2012 11:36am
Quoting qatar
Deflation "probably" will finish in few months. Then or sooner peg will be removed. Of course the pair would plummet, even if Eurocrisis was fixed (not main scenario). Then if deflation threatened SERIOUSLY again price stability (not very likely with CHF expanded monetary base & realstate boom), SNB would intervene with a lower PEG (at around parity).

And if the amount they are having to intervene has slowed which it has why would they remove the floor?

Because it is an EXCEPTIONAL & TEMPORARY measure, according to Jordan
Yep I understand the exceptional and temporary.(how long is temporary? Months-years?) it has already been a year.

But I don't see why they would remove the floor after all the hard work only to watch the euro hit parity and below. Then maybe have to spend billions again to re peg whilst still holding billions of euros they bought at 1.20 level.
  • #9,270
  • Aug 29, 2012 1:25pm Aug 29, 2012 1:25pm
Quoting brinks
Yep I understand the exceptional and temporary.(how long is temporary? Months-years?) it has already been a year.

But I don't see why they would remove the floor after all the hard work only to watch the euro hit parity and below. Then maybe have to spend billions again to re peg whilst still holding billions of euros they bought at 1.20 level.

I agree with Brinks and would even recommend him to keep a few longs open, with sufficient margin to survive the spikes. Jordan did not say that the 1.20 level was "not for eternity", but that the peg, as such, was "not for eternity" as it is an "extreme measure for extreme circumstances". SNB will not give up the peg at 1.20 only to re-introduce the same "extreme measure" again at a lower level. Even IF a lower re-peg could somehow be justified economically, SNB won't do it because it would attract massive short-speculation against the new peg in anticipation of a further re-peg.

Whatever SNB does now will be remembered for decades. Why else would we now still discuss the success or failure of the SNB's experiment with capital controls in the 70's? So in order to maintain credibility for future generations, SNB can only give up the peg as a winner, that is to say, when the EUR/CHF is safely and stable above 1.25 or so. Or once prolonged inflation rate discrepancy between Switzerland and the EZ has bridged the overvaluation gap between the CHF and the EUR (which is years away). Or once Swiss inflation picks up significantly, which would in turn again support a rise in EUR/CHF. So don't make any mistake about it: for the SNB this is a very serious battle which MUST be won. Anything else would be a disaster for its credibility, not only now but for decades to come. Believe me: it won't happen, not in Switzerland, and certainly not with Jordan!
  • #9,271
  • Aug 29, 2012 3:25pm Aug 29, 2012 3:25pm
Quoting Bluedolphin
I agree with Brinks and would even recommend him to keep a few longs open, with sufficient margin to survive the spikes. Jordan did not say that the 1.20 level was "not for eternity", but that the peg, as such, was "not for eternity" as it is an "extreme measure for extreme circumstances". SNB will not give up the peg at 1.20 only to re-introduce the same "extreme measure" again at a lower level. Even IF a lower re-peg could somehow be justified economically, SNB won't do it because it would attract massive short-speculation against the...
I completely agree with you.
  • #9,272
  • Aug 29, 2012 8:50pm Aug 29, 2012 8:50pm
Quoting Bluedolphin
I agree with Brinks and would even recommend him to keep a few longs open, with sufficient margin to survive the spikes. Jordan did not say that the 1.20 level was "not for eternity", but that the peg, as such, was "not for eternity" as it is an "extreme measure for extreme circumstances". SNB will not give up the peg at 1.20 only to re-introduce the same "extreme measure" again at a lower level. Even IF a lower re-peg could somehow be justified economically, SNB won't do it because it would attract massive short-speculation against the...
Well said Bluedolphin, I think you summed it up very well. As you said, the SNB wouldn't abandon the peg just to then again introduce it at a lower rate.
  • #9,273
  • Aug 30, 2012 12:23am Aug 30, 2012 12:23am
Thanks all.

The problem i have is i dont see any sustained move up.
Waiting for a 30 pip spike is not what i'm looking for.

It will probably go and move up now i have said that
  • #9,274
  • Aug 30, 2012 12:30am Aug 30, 2012 12:30am
Quoting brinks
Thanks all.

The problem i have is i dont see any sustained move up.
Waiting for a 30 pip spike is not what i'm looking for.

It will probably go and move up now i have said that


Well, as you know, every time you catch a 30 pips ride at 1:100 leverage, you will cash in a 30% profit on your investment. That's equivalent to a 300pips ride at 1:10 leverage, which is all you can reasonably risk with most other pairs. For me, it's an absolute no brainer, but whatever you decide, I wish you only the best!
  • #9,275
  • Aug 30, 2012 1:38am Aug 30, 2012 1:38am
What I would do (am doing) is treating the EURCHF like an option.
It is not a perfect comparison by any means but:

1. My downside risk is limited to what I have in my account (neg. balance protection!)
2. I am paid positive swap everyday I hold a long position.
3. As I am leveraged up, a move of 1 pip in my favour can mean an a more than AUD$140 profit. So you can make some nice cash almost every week but taking 0.5 pip or 1 pip here and there.
4. The floor of 1.2000 will hold for the foreseeable future and I can withstand moves a bit below it.
5. If they happen to revalue the peg to 1.2500, or 1.3000 then I stand to make a killing.

That's my opinion.
  • #9,276
  • Aug 30, 2012 1:56am Aug 30, 2012 1:56am
Quoting phil3526
What I would do (am doing) is treating the EURCHF like an option.
It is not a perfect comparison by any means but:

1. My downside risk is limited to what I have in my account (neg. balance protection!)
2. I am paid positive swap everyday I hold a long position.
3. As I am leveraged up, a move of 1 pip in my favour can mean an a more than AUD$140 profit. So you can make some nice cash almost every week but taking 0.5 pip or 1 pip here and there.
4. The floor of 1.2000 will hold for the foreseeable future and I can withstand moves a bit below it.
5....


Good strategy phil3526 and, in my opinion, the only sensible one for this pair. In the longterm, your accumulated profits will pay more than any other pair, where you always have the risk of substantial losses. A re-peg higher is very unlikely though, because the deflationary pressure is not sufficient, the economy does well and the SNB does not want to buy EUR at a higher rate than now, because this would mean to sell the CHF even cheaper to CHF-hungry investors. Jordan does not even allow fantasies to emerge in this respect. Instead, he intentionally sucks all the blood out of the this pair and locks into a tight range for months on end, thus making it un-interesting for large professional investors who have to report profits to their clients on a monthly and quarterly basis. Your advantage as a retailer is that you don't need to report quarterly gains. A 1000 pip move up after 2 years of waiting will make you just as happy. I expect the move to be sudden and large, not due to a re-peg or other intervention, but due to "game changer news" from Europe. In my view we may have to wait another 3 to 6 months, but I have no doubt that it will come next year.
  • #9,277
  • Aug 30, 2012 2:37am Aug 30, 2012 2:37am
Quoting Bluedolphin
Good strategy phil3526 and, in my opinion, the only sensible one for this pair. In the longterm, your accumulated profits will pay more than any other pair, where you always have the risk of substantial losses. A re-peg higher is very unlikely though, because the deflationary pressure is not sufficient, the economy does well and the SNB does not want to buy EUR at a higher rate than now, because this would mean to sell the CHF even cheaper to CHF-hungry investors. Jordan does not even allow fantasies to emerge in this respect. Instead, he intentionally...
Exactly. I would LOVE a 1000 pip move up!

1. But about the "game changer news", are you referring to the ECB possibly capping the rates at which some European nations can borrow at, in which the ECB will hold yields on bond prices at an artificially low rate?

2. I have worked out that (with using leverage of course) I can earn a bit over 1.00% per week in swap x 52 weeks = 52% return. Not too bad. I was wondering why hedge funds haven't been piling into this trade? Do you have any idea?
  • #9,278
  • Aug 30, 2012 3:43am Aug 30, 2012 3:43am
Quoting phil3526
Exactly. I would LOVE a 1000 pip move up!

1. But about the "game changer news", are you referring to the ECB possibly capping the rates at which some European nations can borrow at, in which the ECB will hold yields on bond prices at an artificially low rate?

2. I have worked out that (with using leverage of course) I can earn a bit over 1.00% per week in swap x 52 weeks = 52% return. Not too bad. I was wondering why hedge funds haven't been piling into this trade? Do you have any idea?
1. Yes, exactly. This will prove to the market once & for all that the EUR is here to stay, which is what you need for the macro dynamics to reverse.
2. How much leverage do you use? Not sure they can match that in terms of corporate risk management policy.
  • #9,279
  • Aug 30, 2012 3:46am Aug 30, 2012 3:46am
Quoting phil3526
Exactly. I would LOVE a 1000 pip move up!

1. But about the "game changer news", are you referring to the ECB possibly capping the rates at which some European nations can borrow at, in which the ECB will hold yields on bond prices at an artificially low rate?

2. I have worked out that (with using leverage of course) I can earn a bit over 1.00% per week in swap x 52 weeks = 52% return. Not too bad. I was wondering why hedge funds haven't been piling into this trade? Do you have any idea?
My guess for why (not sure if they do or not) they wouldn't look at the 1% per week is that swaps are a very small portion of a larger risk. For example what risk have you got on the table to get that 1%, what drop in price would expose a loss to greater than you gain and what is the margin call risk ie how much does market need to move against my position to send me bust. The EUR/CHF is the sure thing at the moment (with its range) and if it moves up then your position size will mean phenomenal results but the downside is that even though it is 'Pegged' there will be value that may undo that peg and I reacon you would just about be assured to hand back more than the swap gains plus some interest (unless your stops stop the event).

For hedge funds, they are not looking at 100:1 leverage, it is far far less which means more prudent measures need to be taken.
  • #9,280
  • Aug 30, 2012 4:42am Aug 30, 2012 4:42am
I am using rather substantial leverage, though I know what my worse case scenarios are and they will not ruin me.

I was under the impression that given the very very small probability of the price not only falling below but staying substantially below 1.2000, i would have thought hedge funds would be involved in this trade.

I am aware though that some hedge funds are rather "opaque" with investors. And that some (I have been made aware and read about) have been writing options positions that generate income (in the form of premiums paid by buyers) if they are not called to exercise the positions that they have written, but have a potentially massive loss if the position/s are exercised. The fund is on the hook and could be wiped out completely.

Although I am not exactly sure whether hedge funds have any specific rules on how much leverage they can use.
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