EUR/CHF

http://www.xe.com/news/2012/10/09/2979973.htm

I almost forgot to mention yesterdays cpi figures...excuse me mr. George Doran and co.
Where's inflation returning (-0,3 and -0,4 yoy)in october?

Unless SNB choose a level like 1.21 or 1.209 to defend..

Yes, inflation +0.3% m/m as expected. This is a lot.

The y/y effect is small only because the same +0.3% happened to be there for Oct. 2011. Such effects will not be there in the next 4 months where -0.82% will go out of the y/y statistics.

So even without any further m/m inflation, the y/y inflation would then be positive.

I wonder when Swiss employees wake up and realise that with 2.9% unemployment rate and exploding house prices they have strong arguments for some salary increase.

2 % inflation is the goal of SNB... we're quite far away right now... most of "inflation" is fuel-driven atm. And partly sales-ending.

More salaries for employees = more inflation and higher home prices... Seems to me, that there is more pressure in the opposite direction. Espescially (hopefully) from the banking sector.

I think purchase power from EU and CH will converge, therefore, there is no reason for higher wages. Still, swiss employees are too expensive for swiss enterprises.

I agree with many of your points, but my result is different.

Converging purchase power and the end of deflation would mean that SNB can remove the floor even without inflation coming close to 2%.

T. Jordan 2010: "Price stability is equated with a rise in the consumer price index (CPI) of less than 2 percent per annum. The SNB has not set an explicit floor to its definition of price stability. Setting a range of 0–2 percent, for example, would imply a target of 1 percent with an alleged dispersion of +/− 1 percentage point."

This means SNB in 2011 took action because inflation was out of the 0..2% corridor, and with inflation of say 1% there is no justification any more. With inflation of 2% there is contraindication.

Oct. 11 (Bloomberg) -- The Swiss Central Bank owns EU330M worth of shares in stocks listed in Helsinki, including 0.6 percent of Nokia, newspaper Helsingin Sanomat reported.

The Swiss National Bank is Preventing Needed Adjustment http://www.creditwritedowns.com – By Marc Chandler

The Swiss National Bank does not miss an opportunity to remind market participants that it is determined to cap the Swiss franc’s appreciation. The cost of imposing its will appears to be rising. The Financial Times today reports estimates of the magnitude of its intervention range from CHF20 bln to CHF100 bln in recent weeks. Such a wide range illustrates the lack of transparency of the central bank’s operations and the willingness of some participants to simply guess. Swiss sight deposits have risen about CHF18 bln in the past two weeks and this would lend credence to the lower end the range of estimates. Some observers may also be confusing private sector activity for official intervention. There is an important question though that the discussion about how much the cap on the franc is costing the SNB does not address. Simply put, why should a country such as Switzerland, with a net international investment surplus position and a trade and current account surplus, act to avoid currency appreciation? If the Swiss economy was contracting, perhaps tightening of monetary conditions through the currency would not be desirable. But this is most assuredly not the case. Q1 GDP was reported earlier today. It rose 0.7% on the quarter. Recall that the strongest euro zone economy, Germany, expanded by 0.5% in Q1. The Swiss economy is expected to expanded by about 1% this year, while the OECD expects the euro zone economy to contract by 0.1%. Switzerland’s trade surplus has averaged CHF1.74 bln a month through April. During the same period last year, the monthly average was CHF1.64 bln. The most compelling argument for the SNB is that the economy is experiencing deflation. However, putting a cap on the currency is too blunt of an instrument, especially if a) the franc is still overvalued on a PPP model and b) if commodity prices, including energy prices, are falling. If nearly any other country did what the SNB is doing, they would be subject to heavy criticism. Imagine if Japan, which is now running a trade deficit and experiencing (chronic) deflation, surely the US Treasury, EU and various industries would object loudly. Through its currency cap, the SNB is blocking important adjustments and rebalancing of the world economy, especially in Europe. It is distorting the signals to businesses by driving down 2-year rates to negative 41 bp. The 5-year yield is -7 bp. At 51 bp the Swiss 10-year yield is 30 bp below Japan’s and nearly a third of the US yield. Lastly, another point that is obscured by the discussion of the size of the SNB’s intervention, the CHF1.20 floor for the euro and cap for the franc is arbitrary. The SNB repeatedly says that even at CHF1.20, the franc is still over-valued. The SNB could have picked a cap at CHF1.15 or CHF1.10 and not have a material impact on macro-economics. The point here is not that the SNB is going to step away from the market. Rather, its franc cap is contributing to both foreign and domestic distortions and all the speculation of the size of the SNB’s intervention, distracts from the fact that its economy appears strong enough to cope with a stronger franc and its cap is slowing if not preventing the larger adjustment process. More About: currencies, currency wars, current account, Euro, Markets, Switzerland, trade Related research and analysis at Credit Writedowns Pro starts at $3.99. Try Credit Writedowns Pro free for one week.

How old is this report?

http://www.seco.admin.ch/themen/0037...x.html?lang=en

Bullshit! What kind of important adjustments? To pull switzerland into a misery as well? Is this an important adjustment? Higher yields for CHF? --> More money goes out of EURO-Zone into CHF --> Even more problems for EURO-countries? Lower cap has no impoact on macro-economics... what kind of idiocy is that analysis?

The only point is the trade surplus, but thats a question of swiss economic basis.

The main issue is that as long as Mr. Market believes that a fair price is much below 1,20 then SNB can't exit.

Going down cent by cent is no option since HF would immediately cash in the hugest profits ever seen.

And jumping out when it might free fall suddenly will also ruin SNB image, SNB assets and Swiss economy.

So if Mr. Market is not convinced that CHF is weak, what shall they do?

Correct you have to wait and wait and wait and suddenly you realise that inflation is there and that HF have increased speculation against you.

To avoid this worst case scenario my best guess is that they become more proactive:
- step 1: SNB stops the real estate bubble
- step 2: scares people off CHF by negative interest rates (see State Street), capital controls etc.
- step 3: during this time sells EUR, offers SNB bills
- step 4: lifts the floor

As the old saying goes, dont fight the fed or any central bank. The SNB will not let the floor go until after the crisis is over...and even then, they will not turn off the floor like a light switch....its a bit more difficult than that. I for one will keep buying and selling this pair until it no longer works for me. I do think it will go much higher, maybe with Spain finally asking for a bailout. But I just got back from Ireland and France....and boy Ireland has some huge issues that the market has not even seen yet...(banks have not even touched the surface on forclosures yet, and the gov is thinking of doing huge mgtg write downs that the tax payer will have to pay for ... all euro zone tax payers) Its clear that we are still in the early innings of the euro zone debt crisis.... watch out for the big tape bombs from europe over the next 6 months.....and take advantage..

i'm all the way short at 1.2080 min target 1.2060

Well I have small Buy Limits set at 1.2060, 50, 40 and huge limits below 1.2030. Hoping for another drop or spike down. If previously spike ups are common, then spike downs are possible like the Oct 10th spike down due to State Street.

Not much surprising Swiss news these few days and the economic events are always as expected with no surprises. So EURCHF just trailing EUR movements.

But one thing in mind - Swiss is a safe haven and always will be a safe haven. Despite tax evasion agreements etc, I forsee many EZ private funds will still be channeled back into Swiss over the next year as the EZ economic woes haven't hit bottom yet. The last month's liftoff from 1.2010 may be temporary although SNB officials may think CHF will eventually weaken by itself. The only way is for Swiss to join the EU & contribute to bail-out Greece, Spain like Germany and contribute to EFSF , which is not going to happen in my lifetime.

reserves extended ~0,2 billion, so muted SNB activity last week

www.finanzen.net: yesterday there was a short spike low at 1,1998 ???

???

None on my 3 platforms

None seen......

Any technical charting errors???

EURO is gaining vs all pairs but CHF which shows EURCHF doesn't simply follow EURO pattern. is it a sign for falling?

The trend is still too short to see....

But seeing the EZ instability & prolonged crisis, more funds will flow back to Swiss despite EFSF/ESM. I see the sight deposits slowly gaining again. CHF will eventually strengthen over some time, but very very slowly as there are no strong factors exciting CHF. Only slow gradual inflows of funds into CH.