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EUR/CHF

  • #9,981
  • Nov 21, 2012 9:45am Nov 21, 2012 9:45am
DJ MARKET TALK: Status Quo Looking Shaky for SNB's Franc Policy
21-Nov-2012
9:53 EST - While the Swiss National Bank is holding firm on its 1.20 floor for the euro against the Swiss franc, Neil Mellor at BNYMellon notes that a deterioration in the Swiss economy is putting pressure on authorities to do more. GDP is barely expanding, exports have contracted, inflation is "stumbling along" just above deflation, and there's a risk that the euro zone will destabilize again, weakening European demand for Swiss goods, and possibly sending a flood of capital into the safety of the Swiss franc. Raising the EUR/CHF floor doesn't seem to be an option, given the 300% increase in Switzerland's monetary base and concern about credit growth and a housing bubble, Mellor says. That may mean more aggressive policies are coming, such as capital controls, he adds. ([email protected])
  • #9,982
  • Nov 22, 2012 4:27am Nov 22, 2012 4:27am
Quoting pipxster
DJ MARKET TALK: Status Quo Looking Shaky for SNB's Franc Policy
21-Nov-2012
9:53 EST - While the Swiss National Bank is holding firm on its 1.20 floor for the euro against the Swiss franc, Neil Mellor at BNYMellon notes that a deterioration in the Swiss economy is putting pressure on authorities to do more. GDP is barely expanding, exports have contracted, inflation is "stumbling along" just above deflation, and there's a risk that the euro zone will destabilize again, weakening European demand for Swiss goods, and possibly sending a flood of...
There are exactly zero countries in the world that prefer their economy to the Swiss economy.
  • #9,983
  • Nov 22, 2012 10:26am Nov 22, 2012 10:26am
It's somehow a period started that the SNB board is trying to recall the credibility in Swiss, there must be a gate of a new decision that this credibility needs to be spent, it could be a big shift in fiscal and monetary policy along with each other.
  • #9,984
  • Nov 22, 2012 2:02pm Nov 22, 2012 2:02pm
Quoting holmes
It's somehow a period started that the SNB board is trying to recall the credibility in Swiss, there must be a gate of a new decision that this credibility needs to be spent, it could be a big shift in fiscal and monetary policy along with each other.
Sorry, Holmes, but I didn't get what you were trying to say. Can you explain, please?
  • #9,985
  • Nov 22, 2012 4:21pm Nov 22, 2012 4:21pm
Quoting Bluedolphin
Sorry, Holmes, but I didn't get what you were trying to say. Can you explain, please?
I mean the focus is and must be on price stability which seems unreachable to the SNB, when defining the peg of Eur/Chf @1.2 the SNB was hoping for the CPI to gain some and see 2percent in line but after more than a year the downward movement is seen and..., the real problem with weakening CHF through unconventional monetary policy is adding reserves which Jordan reiterated it could be unlimited but the reserve can grow if there is unlimited credibility and no bank in the world has unlimited credibility, let's assume the rate changes not to 1.3 but to 1.4 and in 6 months the reserves grow to 900bl, for the SNB as the central bank of a small country it is huge and financial departments in the world can't accept it so there will be a threat of bankruptcy unless they can prove sustainable credibility and I think this is what they are doing and the rate 1.2 does no good at all and there need other steps to be taken. Let's see the risks if they have the credibility and move the rate for 1.4, 2 risks according to the board: 1- inflation 2- CHF absorption after crisis, what the SNB believes is that first risk is out of choice since the figures show there is not such a threat anywhere and in Swiss as well and for the second risk bold stance of Jordan of not investing the reserves and keeping for that monetary issues guarantee the risk. I strongly believe after inducing the credibility needed for further steps to world financial markets, which has been in process and is mostly done, there will be a surprise from Switzerland of weakening CHF for 1000-2000 pips.
  • #9,986
  • Nov 23, 2012 3:45am Nov 23, 2012 3:45am
Quoting holmes
I mean the focus is and must be on price stability which seems unreachable to the SNB, when defining the peg of Eur/Chf @1.2 the SNB was hoping for the CPI to gain some and see 2percent in line but after more than a year the downward movement is seen and..., the real problem with weakening CHF through unconventional monetary policy is adding reserves which Jordan reiterated it could be unlimited but the reserve can grow if there is unlimited credibility and no bank in the world has unlimited credibility, let's assume the rate changes not to 1.3...
I'm still long but i don't expext SNB to take further measures. Trade balance is still positive, and an inflation of more than 2 % would lead to potential interest rate hikes. And there is no room for that. Switzerland is doing well with 1.20...

but 1000 to 2000 pips higher floor... would be ok for me, but in my opinion really unrealistic! :-)
  • #9,987
  • Nov 26, 2012 4:54pm Nov 26, 2012 4:54pm
Guys, does anyone understand why eurchf plunges while eurusd rises on news of Greek deal? Shouldn't this trigger risk on also for eurchf? Or is SNB keeping it down with EUR-sales? Any insights?
  • #9,988
  • Nov 27, 2012 2:01am Nov 27, 2012 2:01am
Quoting Bluedolphin
Guys, does anyone understand why eurchf plunges while eurusd rises on news of Greek deal? Shouldn't this trigger risk on also for eurchf? Or is SNB keeping it down with EUR-sales? Any insights?
Certainly, this pair is interfered severely by the SNB, therefore you can see their policy by monitoring the pair closely.
  • #9,989
  • Nov 29, 2012 7:54am Nov 29, 2012 7:54am
Jordan continues to speak of "extreme circumstances".

I can't stand this nonsense any more. Swiss reality is:
- employment level 4.14m all time high
- unemployment rate 3,0% close to all time low
- GDP growth 0.6% q/q
- Trade balance 2.82b close to all time high
- Net salary increase around 2%

And international reality is also improving:
- DAX close to 4 year high
- Greece gets more time which helps to avoid EZ Domino effects
- Italian 10y bonds for 4.45% (down from 7,56% one year ago!)
- US: GDP growth 2.7% q/q, fiscal cliff compromise in view

And please don't cry for Argentina :-)

The only extreme is FX at SNB.
  • #9,990
  • Dec 1, 2012 2:03am Dec 1, 2012 2:03am
SNB V Hedge Fund,
Who do you think will win?
  • #9,991
  • Dec 1, 2012 2:32am Dec 1, 2012 2:32am
Quoting entheos
SNB V Hedge Fund,
Who do you think will win?
New tagline for SNB - "Beating hedge funds since Sept. 6, 2011."
  • #9,992
  • Dec 3, 2012 3:52am Dec 3, 2012 3:52am
drop in sight deposits?

bet on SNB and fundamentals...
  • #9,993
  • Dec 3, 2012 4:00am Dec 3, 2012 4:00am
Yes, drop in sight deposits, Eurozone is gaining back investor confidence - Greece is getting their money, Spain is still ok.
Moody's downgrade of ESM/EFSF has no effect at all on EUR. Investors don't bother!
EURCHF is still tracing EURUSD. EUR is relatively strong on most pairs.....
... but how long will these last? A few weeks maybe?

The next big movement will be Dec 13th SNB meeting. Up or down, if you check the last 4 quarterly meetings, the pair has traded in very different patterns!

What's your advice now? I have some small short positions around 1.2050... Still waiting for going long when it drops to 1.2020 - but I think it won't happen anytime soon.
  • #9,994
  • Dec 3, 2012 4:09am Dec 3, 2012 4:09am
Quoting alaneth
Yes, drop in sight deposits, Eurozone is gaining back investor confidence - Greece is getting their money, Spain is still ok.
Moody's downgrade of ESM/EFSF has no effect at all on EUR. Investors don't bother!
EURCHF is still tracing EURUSD. EUR is relatively strong on most pairs.....
... but how long will these last? A few weeks maybe?

The next big movement will be Dec 13th SNB meeting. Up or down, if you check the last 4 quarterly meetings, the pair has traded in very different patterns!

What's your advice now? I have some small short positions...
Good news all around... Can't imagine what will happen, when there will be some better economic news on fundamentals out of PIIGS... Trade surplus from greece is hopefully just the beginning. I don't think, that PIIGS-economies are only oneway... there will be some relief somewhen, at least, when the basis is at "0". ;-) After 3 years of austerity, there must and will be a change somewhen.

1.2030 seems to be strong for the moment, therefore i would change direction @ around 1.2035 and would not wait to around 1.2020. Me for myself i'll stay long, giving 1 @ 1.2068.
  • #9,995
  • Dec 3, 2012 4:30am Dec 3, 2012 4:30am
Quoting Swissie
Good news all around... Can't imagine what will happen, when there will be some better economic news on fundamentals out of PIIGS... Trade surplus from greece is hopefully just the beginning. I don't think, that PIIGS-economies are only oneway... there will be some relief somewhen, at least, when the basis is at "0". ;-) After 3 years of austerity, there must and will be a change somewhen.

1.2030 seems to be strong for the moment, therefore i would change direction @ around 1.2035 and would not wait to around 1.2020. Me for myself i'll stay...
Yes, 1.2030 is a strong support. I like your idea to long at 1.2035, although smaller lots for me there first. 1.2020 is too far off. But as SNB's meeting is near, I don't know what to expect yet.
  • #9,996
  • Dec 3, 2012 4:53am Dec 3, 2012 4:53am
Quoting alaneth
Yes, 1.2030 is a strong support. I like your idea to long at 1.2035, although smaller lots for me there first. 1.2020 is too far off. But as SNB's meeting is near, I don't know what to expect yet.
I would not expect anything... beside of "utmost......"
  • #9,997
  • Dec 3, 2012 6:54am Dec 3, 2012 6:54am
Quoting Swissie
I would not expect anything... beside of "utmost......"

anybody knows what happened?
1.209 and it still goes up..
  • #9,998
  • Dec 3, 2012 6:58am Dec 3, 2012 6:58am
Quoting rcrist
anybody knows what happened?
1.209 and it still goes up..
CSG charges negative interest on CHF for banks
  • #9,999
  • Dec 3, 2012 6:59am Dec 3, 2012 6:59am
Quoting rcrist
anybody knows what happened?
1.209 and it still goes up..

This proves the pair is alive.. You just need to wait long enough...
  • #10,000
  • Dec 3, 2012 9:32am Dec 3, 2012 9:32am
Arghh! I'm a little short.... Just a few hours ago.

But I'm going to open a little more short positions now.

What do you guys think? After market digestion, will it continue to drop?
or more banks will follow suit these few days?
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