{quote} I believe SNB has set the floor at 1.20 (instead of 1.22) and since they set the floor, eurchf has come close but has not breached it yet. it is certainly possible mkt tries SNB's mettle again but i think SNB will protect it fiercely. Also SNB is not a p&l center so they dont need to look for liquidity. Central banks task is to manage their currency (and economy) so they dont care if they have to suck up liquidity and move mkt by a lot. In fact they would rather not have to do trading and just jaw bone the price...
) ..If they dont need the liquidity to sell Francs how do they move into opposingcurrencies/instruments ? I completely agree they are only interested in the economic values first and foremost not the P&L but to actually move that
amount of order weight to protect 1.20 without the need for huge liquidity means they would struggle to get their order flow absorbed into the
offers...wouldn't it ?
If you look at a Dom Ladder and see the Large bids/ axes waiting on the bid they sometimes have to wait a while if the offer isn't all
consuming, waiting for their large bids to be absorbed... the mechanics are the same right but on a larger scale ?..Also Inter-banks will only take single size units no larger than 1 million, so to enter very large multiple 1 million size positions they would have to wait to get their positions filled, getting huge amounts of slippage etc unless the liquidity is there ?
Sorry stt if Im way off base with my theory ? My knowledge of interbank level dealings is minimal and my Knowledge of National
bank movement/ protection is even less.... but I would like to learn more about it
Memories caught in time but never forgotten
