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  • #141
  • Edited 4:13am Jan 18, 2015 3:52am | Edited 4:13am
Quoting stoplossmatt
no it was a wrong move completely. if you ask me on 15/1/15 SNB should have lowered interest rate to 0,75, as they did and rise the peg to 1,25 and signal in the statement that it is willing to do further risings if necessary to protect overvaluation of CHF..as it was normal and all normal traders expected after their last meeting 1 month ago...by doing so they would have punished those who purchased CHF and made a pressure on themselves to protect their economy and reserves...by doing what they did they have rewarded those who made a pressure on...
Big thumbs up on that stoplossmatt. Exactly.......As a central banker whose role is to manage a country's balance of payments, act as lender of last resort and prudently use monetary policy to protect against adverse market movements and stabilise monetary systems, this was an extraordinary decision and inept in its execution. Whilst the immediate pain is being felt by the financial sector and sorting out the 'naked swimmers', the long term effect is going to cripple the country's exports. That is why I feel that there is a significant chance for further *ballsup* intervention to once again lower the relative exchange rate and given this last attempt, any CHF pair is probably going to face a rocky road ahead

I half suspect that the sudden move was a swift reaction to what is coming with the proposed ECB bond buying program which will weaken the Euro and that's probably why they panicked and had to act fast. There has been political pressure building to remove the cap which they were prepared to tolerate until now. I think they were genuine with their willingness to keep the cap in place a week or so ago, so whatever has changed their mind has happened in a week. The move appears to be a 'last straw decision' so I think something significant is coming. That's why I think the move was correlated with the pending ECB decision. Let's see how this all plays out this week. I will be in my trench with my helmet on.
  • #142
  • Jan 18, 2015 4:25am Jan 18, 2015 4:25am
Quoting Copernicus
{quote} Big thumbs up on that stoplossmatt. Exactly.......As a central banker whose role is to manage a country's balance of payments, act as lender of last resort and prudently use monetary policy to protect against adverse market movements and stabilise monetary systems, this was an extraordinary decision and inept in its execution. Whilst the immediate pain is being felt by the financial sector and sorting out the 'naked swimmers', the long term effect is going to cripple the country's exports. That is why I feel that there is a significant chance...
one other thing my friend...for 3 years SNB were selling CHF at 1,20 from Swiss FX State reserves in order to control the market....One will need to say that those reserves should be returned and filled one day ...Tomorrow when market opens SNB can start filling back those Swiss State Reserves short position at the price below 1,00....that is great mathematics...not to mention millions of accounts and brokers going bust outside CH
  • #143
  • Jan 18, 2015 5:15am Jan 18, 2015 5:15am
Quoting Copernicus
{quote} Big thumbs up on that stoplossmatt. Exactly.......As a central banker whose role is to manage a country's balance of payments, act as lender of last resort and prudently use monetary policy to protect against adverse market movements and stabilise monetary systems, this was an extraordinary decision and inept in its execution. Whilst the immediate pain is being felt by the financial sector and sorting out the 'naked swimmers', the long term effect is going to cripple the country's exports. That is why I feel that there is a significant chance...
What about the opposite scenario (i know the consensus is about the snb to have dropped the peg as they know ecb is going for a qe, and the peg would become too much expensive to be protected), a scenario where the snb know that there is not a real reason to hold the floor anymore, because the eur is basically going to reverse pretty soon.

Yes, talks about ecb QE, but such talks are there from almost a year, and the eur may as well have already priced in a QE of any size.
Also, with the eurusd at such low levels, inflation (low inflation, the main reason of all this eur QE talks) will grow soon, with or without QE.

What i think happened is, the snb somehow know that the eur is bottoming, therefore there is no need to have a peg of 1.20 anymore, what they did then, they "secretly" sold most of their eur reserves in the past months, the floor is protected mainly from chf speculators that used to buy around 1.20 thinking it was a sure bet.

Anyway, the snb stepped out, we had this stops triggered (it was inevitable), nothing to see here.

And now, i would not be surprised to see eurchf go up again, way above 1.20, in a medium-long term uptrend.

I'm not saying that this will happen, but i keep an eye on it as a possibility, especially if the ecb announce a QE, to me it can be bullish for the eur.
  • #144
  • Edited 6:50am Jan 18, 2015 6:05am | Edited 6:50am
Quoting spaceduck
{quote} What about the opposite scenario (i know the consensus is about the snb to have dropped the peg as they know ecb is going for a qe, and the peg would become too much expensive to be protected), a scenario where the snb know that there is not a real reason to hold the floor anymore, because the eur is basically going to reverse pretty soon.
Not sure but the immediacy of the move by the SNB suggests otherwise considering their position a week before.

Quoting spaceduck
Yes, talks about ecb QE, but such talks are there from almost a year, and the eur may as well have already priced in a QE of any size. Also, with the eurusd at such low levels, inflation (low inflation, the main reason of all this eur QE talks) will grow soon, with or without QE. What i think happened is, the snb somehow know that the eur is bottoming, therefore there is no need to have a peg of 1.20 anymore, what they did then, they "secretly" sold most of their eur reserves in the past months, the floor is protected mainly from chf speculators...
Good rationale but I still hold a contrary view. Despite this however I think it is safe to assume some volatility ahead and to be very careful. Given the move on the chf and the inadequacy of stops to fully protect except perhaps guaranteed stops with MM, perhaps the wisest move if you are holding a position in EUR pairs or CHF pairs is to hedge immediately prior to the ECB announcement and wait for the dust to settle provided that the remaining ECN brokerage houses can hold out. What we would both agree on is the likelihood that price is not going to stay where it is.

Back in the old days the money game was far more predictable, you just had to worry about traditional market volatility and evaluate how an economy faired using traditional indicators like debt to productivity ratios, but nowadays given that the central bankers have stuffed the global economy by intervening with market dynamics and have sought to maniupulate rather than repair by QE's which kick the can down the road, it is impossible to apply logic in this market and determine risk parameters. Nowadays it is not what the economy produces but rather, what the market predicts the central bankers will do, and where the market is going to get it's next fix! Now that's the question.

While this is all crystal ball gazing, it is best to stay cautious given that the fallout from chf may have a while to equilibrate in the market.......damn bankers. :-)
  • #145
  • Jan 18, 2015 6:24am Jan 18, 2015 6:24am
Totally agree with your post, these are times where we MUST be extremely prudent and think deeply about any position we take, be smart.
I don't have current open positions and do plan to stay out of the market or play extremely safe untill the ecb meeting.

Quoting Copernicus
{quote} Not sure but the immediacy of the move by the SNB suggests otherwise considering their position a week before.
Their position a week before? Ahahaha, sometime they lie knowing that they are lying, well actually most of the time!

I can tell you a dozen times other cbs (like fed or ecb) have lied shamelessly to the markets, and i guess they will continue to do it forever, but i must recognize this snb guys are the most irresponsible ones, what they may have triggered last week can be something way bigger than many can think about (hedgefunds and banks going burst, swiss stock market crashing, etc.).

At the same time i do agree with jordan that say take the market by surprise was the best thing to do, actually was the only sensible thing to do, even knowing the possible consequences.

In other words, lying was the best thing to do, hell this snb guys are smart
  • #146
  • Jan 18, 2015 6:52am Jan 18, 2015 6:52am
Quoting spaceduck
Totally agree with your post, these are times where we MUST be extremely prudent and think deeply about any position we take, be smart. I don't have current open positions and do plan to stay out of the market or play extremely safe untill the ecb meeting. {quote} Their position a week before? Ahahaha, sometime they lie knowing that they are lying, well actually most of the time! I can tell you a dozen times other cbs (like fed or ecb) have lied shamelessly to the markets, and i guess they will continue to do it forever, but i must recognize this...
I agree. I have been suss about the Swiss since they started ripping us off by putting huge holes in their cheese/tic. I mean who wears clogs (apart from the Dutch oooops)....I mean really!!!!!

They are shifty blighters. Here is a video of the SNB's last planning session. The outward appearance is all fun and games but I can just see them scheming the next fallout :-)

Inserted Video
  • #147
  • Jan 18, 2015 6:52am Jan 18, 2015 6:52am
Quoting Copernicus
{quote} Whilst the immediate pain is being felt by the financial sector and sorting out the 'naked swimmers', the long term effect is going to cripple the country's exports. That is why I feel that there is a significant chance for further *ballsup* intervention to once again lower the relative exchange rate and given this last attempt, any CHF pair is probably going to face a rocky road ahead That's why I think the move was correlated with the pending ECB decision. Let's see how this all plays out this week. I will be in my trench with...
Agree. will also be in my trench. Cautious for the fallout that can still come, my account is in Cyprus and withdrew all but $200, so can't trade.
  • #148
  • Jan 18, 2015 7:22am Jan 18, 2015 7:22am
Quoting Copernicus
{quote} Not sure but the immediacy of the move by the SNB suggests otherwise considering their position a week before. {quote} Good rationale but I still hold a contrary view. Despite this however I think it is safe to assume some volatility ahead and to be very careful. Given the move on the chf and the inadequacy of stops to fully protect except perhaps guaranteed stops with MM, perhaps the wisest move if you are holding a position in EUR pairs or CHF pairs is to hedge immediately prior to the ECB announcement and wait for the dust to settle provided...
Agreed with most of this, now that politics plays such a large role in Central Banks, which is against the whole idea of them in the first place, unpredictability will be the norm. They are keen to solve todays problems and let someone else worry about the new problems down the road. Was the SNB right? I guess we will see in time when we are all gurus. I suspect though that a large part of the thinking was to clear a "fire break" ahead of the ECB announcement, whatever that may be. If QE is announced I wouldn't expect huge sustained movement. I think the market has factored in that it has to happen in some form at some stage.
More importantly, how do we trade it? Cover all your bases. If you are with a MM or even ECN broker, be very careful, guaranteed stops are not always "guaranteed', as many found last week. In my opinion, STP brokers are definitely the way to go at these times, "doin it old style", but you know where you are at. For most though, probably a good time to sit on the sidelines and learn some lessons at others expense.
  • #149
  • Jan 18, 2015 7:37am Jan 18, 2015 7:37am
Quoting stoplossmatt
{quote} one other thing my friend...for 3 years SNB were selling CHF at 1,20 from Swiss FX State reserves in order to control the market....One will need to say that those reserves should be returned and filled one day ...Tomorrow when market opens SNB can start filling back those Swiss State Reserves short position at the price below 1,00....that is great mathematics...not to mention millions of accounts and brokers going bust outside CH
This may be one of the stupidest post I saw.
The SNB creates CHFs out of thin air at will, they can create as much as they want. CHFs do NOT come from "reserves"

With this newly created CHFs, they bough EUROS. This are the Fx reserves: Foreign currencies they can't create, but have in "reserve".
Now, they are supposed to have a lot of EUROS worth less in term of CHFs, so if they sell them again, they take a loss.
But I suspect they sold a lot around 1.20 to people who believed their lies when they bragged about the floor being the cornerstone of their policy and other BS.
  • #150
  • Jan 18, 2015 7:57am Jan 18, 2015 7:57am
Quoting Mevo
{quote} But I suspect they sold a lot around 1.20 to people who believed their lies when they bragged about the floor being the cornerstone of their policy and other BS.
Sad truth.
They have probably bought again at around 0.9 from all these bankrupted 1.20 buyers :°D

That's the game baby ahah
  • #151
  • Jan 18, 2015 8:32am Jan 18, 2015 8:32am
According to my researches, the SNB foreign reserves was at some point around 80% of the Swiss GDP.

Their latest GDP figures are 371 billion dollars.

So at some point the SNB had 297 billion dollars to screw around the markets.

Some of this money was kept in currency ( euros) but the bulk went to buy European bonds, other currencies and maybe gold.

The gossip is that it was getting harder and harder for the SNB to find something worth buying around Europe, so there was no reason to keep buying euros.
So, you think you have rights? LOL
  • #152
  • Jan 18, 2015 8:53am Jan 18, 2015 8:53am
Thomas Jordan hinted in the announcement that they are maybe more interested on the level of USD/CHF than the EUR/CHF.

So they may be buying dollars now.
So, you think you have rights? LOL
  • #153
  • Jan 18, 2015 9:17am Jan 18, 2015 9:17am
With huge position, I don't think they can unwind their position. I think they lost a lot of money to the other central bank and destroy their economy. This was stupid decision they made. They should smart like Fed so that they can control their currency in stable term.
  • #154
  • Jan 18, 2015 9:21am Jan 18, 2015 9:21am
Quoting ForexOracle
According to my researches, the SNB foreign reserves was at some point around 80% of the Swiss GDP. Their latest GDP figures are 371 billion dollars. So at some point the SNB had 297 billion dollars to screw around the markets. Some of this money was kept in currency ( euros) but the bulk went to buy European bonds, other currencies and maybe gold. The gossip is that it was getting harder and harder for the SNB to find something worth buying around Europe, so there was no reason to keep buying euros.
Seriously ? YOUR researches ?
Just type "Swiss GDP" into google, and you will know that Swiss GDP was 650 billions USD in 2013

Then, about SNB's Fx reserves, it's a published stat, so forget "YOUR researches"
http://www.reuters.com/article/2015/...0UM0V320150107
  • #155
  • Jan 18, 2015 9:21am Jan 18, 2015 9:21am
Quoting spaceduck
{quote} Sad truth. They have probably bought again at around 0.9 from all these bankrupted 1.20 buyers :°D That's the game baby ahah
i really dont understand you mevo and you spaceduck..were they buying or selling CHF at 1,20??...and are centralbank's there to create turmoil or to calm the situation...by lowering a peg and signaling further lowering they would have calmed any potential CHF buying..nobody wants to but crrency that has no potential to go up but only can fall down plus has a negative interest rate of -0,75?? after such calming down they could have re-bought back Swissies they have sold to CHF buyers at 1,20...in such case you have devalued currency, competitive economy, calm situation and positive FX gains (sell chf at 1,20 and re-buying them bacxk at 1,25 and further at 1,30)..comprende amigos?
  • #156
  • Jan 18, 2015 9:25am Jan 18, 2015 9:25am
Quoting stoplossmatt
{quote} i really dont understand you mevo and you spaceduck..were they buying or selling CHF at 1,20??...and are centralbank's there to create turmoil or to calm the situation...by lowering a peg and signaling further lowering they would have calmed any potential CHF buying..nobody wants to but crrency that has no potential to go up but only can fall down plus has a negative interest rate of -0,75?? after such calming down they could have re-bought back Swissies they have sold to CHF buyers at 1,20...in such case you have devalued currency, competitive...
Why not try to understand a little things before posting ?
Wouldn't it be a good idea to at least know if they were buying or selling, what, and so on ?
  • #157
  • Jan 18, 2015 9:45am Jan 18, 2015 9:45am
Quoting stoplossmatt
{quote} i really dont understand you mevo and you spaceduck..were they buying or selling CHF at 1,20??...and are centralbank's there to create turmoil or to calm the situation...by lowering a peg and signaling further lowering they would have calmed any potential CHF buying..nobody wants to but crrency that has no potential to go up but only can fall down plus has a negative interest rate of -0,75?? after such calming down they could have re-bought back Swissies they have sold to CHF buyers at 1,20...in such case you have devalued currency, competitive...
Oh so you say that a better idea would have been to lower down the floor to 1.15 for example?
That would have costed them soo many billions of dollars, you have to remember that more than 90% of market speculators (not only retail traders, big banks and hedgefunds too) was long eurchf (or xxxchf, doesn't really matter), many on margin, the basic problem here is that there was a hell of stoplosses that got triggered, and have created the super drop.

Now, if the snb would have lowered down the floor at 1.15 for example, they would have to buy all these eur of the people getting stopped out, and they would found themselves with even more eur in their reserves, and a market that now sell eurchf knowing that the policy is to lower or remove the floor.

No man, they made the exact right thing, get out from the bid in a total surprise, let the shit crash, let the people burn, and what is to be must be.

Clearly the reaction was maybe too much big, i mean come on i can understand such a movement on litecoin (not even bitcoin!) or some even smaller and useless virtual currency, but seeing the usdchf gbpchf chfjpy and eurchf charts, well incredible..

And btw, the chf gained value (everybody bought chf in a hurry as soon as the peg was removed), regardless of the negative interest rate.

About WHO bought all that billions of chf in that moments, i think the snb itself was the biggest and probably one of the few buyers, along with the stop-orders of the eurchf buyers of course.

Very evil, very evil..
  • #158
  • Jan 18, 2015 10:05am Jan 18, 2015 10:05am
Quoting Mevo
{quote} Why not try to understand a little things before posting ? Wouldn't it be a good idea to at least know if they were buying or selling, what, and so on ?
it was an ironical question i asked that needed no reply..everybody knows they were selling chf...however you've suggested they were secretly buying them ?? while telling everybody they will defend the CHF at any cost at 1,20??
  • #159
  • Jan 18, 2015 10:07am Jan 18, 2015 10:07am
Quoting spaceduck
{quote} Oh so you say that a better idea would have been to lower down the floor to 1.15 for example? That would have costed them soo many billions of dollars, you have to remember that more than 90% of market speculators (not only retail traders, big banks and hedgefunds too) was long eurchf (or xxxchf, doesn't really matter), many on margin, the basic problem here is that there was a hell of stoplosses that got triggered, and have created the super drop. Now, if the snb would have lowered down the floor at 1.15 for example, they would have to...
i never said they should have lowered the peg to 1,15...they should have lowered (from CH point of view) the price of chf to 1,25
  • #160
  • Jan 18, 2015 10:08am Jan 18, 2015 10:08am
Quoting investing101
You think because you can manage leverage this wouldn't have affected you? Unfortunately I have nothing to do with knowing how to use leverage. You could have lost much more than you could imagine. {quote}
Like I mentioned, I keep very small portion of my available forex funds with actually broker. So, no, it wouldn't have affected me.
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