Recent History of the Swiss franc: March 2009

Don’t believe everything you hear today as somebody might be having you on!

The CHF is making a comeback and it’s imminent demise, which I have been forecasting, is obviously greatly exaggerated. EUR/CHF is back under 1.5100 and no sign of the SNB. Longs will be getting nervous.

AUD/USD made a nice rally off the hourly double bottom at .6775. Looks like a .68/.70 range to me. EUR/USD is well supported by Sovereign buying in the 1.31’s but I am not overly convinced yet that the EUR is ripe for another bull run. GBP I still like although I have no rational explanation for why it should rally, apart from being oversold.

The JPY will dominate the session again in Asia. I still believe in a 92-102 consolidation range for USD/JPY and I will only contemplate trading it if we get close to either extremity.

Good luck today.

EUR/CHF continues to trade somewhat heavily, presently at 1.5150. The need to buy swissy for MSCI month-end rebalancing purposes  is weighing on the cross today.

As we thought there have been rumours circluating today regarding covert SNB intervention, which did help lift the cross to a 1.5194 high at one juncture.

Sources now report decent buy interest in the cross lying down at 1.5125/30, which funnily enough is the first technical support level of note. Below that we have 1.5100 and then 1.5080/85, while resistances are seen at 1.5215/20 and 1.5240.

LATE NEWS FLASH:  Just been told by market source sell-stops are gathering at 1.5120, which makes perfect sense I guess.

Well, it finally came. Such is the negative bias toward the euro at present, the swissy bulls finally managed a breach of the 1.5180/00 psychological area. It was psychological in as much as that’s where a fair few thought the SNB might come in and buy the cross.

When they didn’t turn up stop loss sell-orders lined up at 1.5175 were triggered, sending the pairing to a 1.5128 low, before recovery.

Swissy has also been given a boost from the increased risk aversion today, as its’ safe haven premium comes into play.

We’re presently at 1.5150 and even given the euro’s plight, the safe haven gains, and even having breached 1.5180 without any sign of the SNB, the progress lower is likely to be pretty laboured. At the end of the day the SNB can turn up at any juncture. And even if they don’t there’s likely to be rumours of such as we head lower, just to keep the swissy bulls on their toes (or is it hooves.)

Technical supports now lie at 1.5125 and then 1.5080, resistances at 1.5220 and 1.5240.

The USD/JPY is now drifting towards the 97.00/50 region with the JPY crosses all on or near their lows for the day. It looks like risk aversion has resurfaced a little today, with equity markets lower and G20 it is not too surprising.

This is the level where the SNB were expected to be but it looks like EUR/CHF traded at 1.5160 in early trade and no sign of any central bank activity. I am hearing of more stops now below 1.5140.

Despite the euro’s weakness, the EUR/CHF cross is struggling to hold below 1.5200 (back at 1.5215 presently after posting a session low down around 1.5180.) If  I didn’t know better (well actually I don’t) might be tempted to conclude there is a little covert intervention going on. Ummmm?

More likely though, it’s just the market doing the SNB’s job for them.

EUR/CHF is on the move, trading lower as the the euro sees across the board losses. The euro is being underminned by Steinbruecks’ earlier comment that the euro would be threatened if the Stability and Growth Pact were not taken seriously, and by ongoing speculation that the ECB will soon move to quantitative easing.

EUR/CHF is presently down at 1.5215 from around 1.5265 at the European opening.  We’re fast approaching the 1.5180/00 area, where some feel the SNB will come in again. Will be interesting to see whether there is still the evident caution below 1.5200.

EUR/CHF remains mired in a relatively narrow range. Although its up marginally on the day, presently at 1.5265 compared to an early 1.5240 in Europe, it still doesn’t look likely to go very far in either direction.

Earlier a peek over 1.5300 was soon repelled. We didn’t hear any talk of BIS selling, but wouldn’t surprise me at all if the bank was there capping the rally.

The  KOF institute earlier today released its’ latest Swiss growth forecasts and they weren’t very pretty and have served to undermine swissy somewhat today. The institute sees Swiss GDP shrinking a hefty 2.4% in 2009 and by a further 0.3% in 2010. Back in December they had forecast  -0.5% for 2009, before a rebound to +0.6% in 2010.

Looks like 1.5150-1.5400 range is here for a little while longer.

• The closest big level is 1.1160/70 in USD/CHF. This is a major 50% retracement level and has based the market on three occasions. I am running a small long position in Swissy and I will exit and reassess below this level.
• Also watch for 1.5180 in EUR/CHF as this is where the SNB is rumoured to be buying. If they are not there, there will be lots of stops just below.
• On a purely technical note, cable is again closing back below its 100-day MA at 1.4610. If intraday rallies remain capped below there it should be bearish for the pound.

EUR/CHF sits at 1.5225, pretty much unchanged on the day as the pairing continues to experience uninspired narrow rangebound trade. It comes as no great surprise as we mentioned yesterday. Interestingly enough the cross did dip lower hitting a low of 1.5192. It’s interesting because a fair few people have touted the 1.5180/00 area as a likely zone for renewed SNB intervention to resurface. The rebound from the low reflects nicely the obvious caution in the market.

Earlier today SNB’s Roth said the bank expects to see a decline of 2.5-3.0% in Swiss growth for this year and stagnation in 2010. Regarding intevention in the swiss bond market; the SNB chief said it must be done cautiously.

The esteemed Macro Man blog lambastes the Fed, BOE and Swiss National Bank, especially the SNB for not following up on its intervention in EUR/CHF.

EUR/CHF is trading lower on the day, presently at 1.5265 compared to a European opening around 1.5325.

Ongoing reports of the BIS selling above 1.5300 have weighed on the cross, as are growing suspicions the ECB might just be the next central bank to dip their toe into the quantitative ease waters.

However the downside for the cross remains limited by ongoing fears of renewed SNB intervention. The Swiss have made it plain they don’t want to see their currency strengthen against that of their biggest trading partner. Another inhibiting factor on the downside is the improved risk sentiment being seen, which helps erode swissy’s safe haven premium curtailing gains in the currency.

There are no doubt more factors at play, as there always are, but the above could well be enough to keep the cross boxed in for the short-term at least and restricted to a relatively narrow range.

• Weber: Hypo Real Estate cannot be allowed to become insolvent; would be many times the impact of Lehman Bros; ECB still has room for maneuver on rates
• Dutch central banker Wellink: Months of sub-zero inflation ahead but no deflation, ECB has room to cut
• SNB’s Roth: Currency sales the best method of quantitative ease and fighting deflation.
• Berlusconi, Barroso: No Eurozone bailout plan for other members, but “solidarity” if need presents itself
• Congressional Budget Office sees $1 trln deficits in each of the next 10 years
• Canadian retail sales rebound in January, +1.9%
• S&P 500 closes down 2%, 10-year notes yield rises 10 bp to 2.64%,
• Oil settles at $51.06, Gold consolidates around $953.00

It was a day of backing and filling in EUR/US in the US with choppy trade between 1.3525/1.3625 the norm with some minor range extensions on wither end of the range. Weekend profit-taking was the main theme of the day though a few stray flows helped inject plenty of volatility. A EUR/JPY fixing order helped squeeze the market after a dip to 1.3518 triggered stops in the 1.3525 region; prices jumped back to 1.36 very quickly before declining into the 1.35s for the balance of the afternoon. UBS called for the ECB to adopt QE via the commercial paper market later this year, after a 50 bp cut to 1.0% in April. New York range: 1.3518/1.3650

USD/JPY and EUR/JPY were in demand in the US with a US investment bank seen as an active afternoon buyer. Watch for a potential bearish cross in the 10 and 21 day averages to signal a top near-term. 95.20/96.25 was the New York range.

Bullish comments for EUR/CHF from SNB President Roth helped lift EUR/CHF back above 1.5300. His comments were similar to those delivered by Jordan on Thursday. They want to keep the market uncomfortable and in fear of further intervention. Roth called intervention the best way to quantitatively ease and stave off deflation. 1.5256/1.5321 The New York range

Speaking in the present tense, SNB president Roth says the strong franc is the main problem. Not WAS the main problem at 1.48, but IS the main problem at 1.53.

He says it is important the franc not rise further.

Deflation is his main worry, he says.

UPDATE: More from Roth: Currency sales are the strongest method of quantitative easing and fighting inflation.

Earlier today, the BIS was a seller above 1.5300; they were above 1.54 yesterday.

Yesterday saw the BIS selling the EUR/CHF cross above 1.5400, today they’ve been seen selling above 1.5300. The cross is presently down at 1.5285 having opened in Europe today up around 1.5335.

Now we know the BIS was an active buyer of the cross just ahead of the SNB announcement that they were going to intervene to actively weaken the swissy. From that, and knowing how the world works, one can probably surmise that the boys in Zurich are more than willing to tip the wink to the boys in Basle as to their likely plans.

Call me stupid (and a lot of people do), but that would tend to suggest (to me anyway) that imminent SNB intervention around current levels isn’t very likely. Still some people touting 1.5180/00 as a possible line in the sand where the SNB might come back in, while others feel the SNB won’t bother turning up again till the 1.5000 area. Ummm, interesting stuff, and dangerous too!!!

Not much in the way of data until after 07:00 GMT when we have German PPI out. For a complete run down on what has come and what is still in store for us please view the economic data table that i have attached for your viewing pleasure.

Jordan continues his comments on the Swiss franc saying the intervention was to stem the rise in the franc, not to gain an advantage over other countries.

Left unsaid though is that gaining an advantage over other countries in the process is a nice side-effect. Call your doctor if it lasts more than 4 hours…

The comments have taken the steam out of the EUR/CHF rally. It is back to 1.5360 from 1.5423.

Swiss National Bank board member Jordan says that the crisis calls for too much rather than too little monetary policy stimulus. Switzerland is in a “massive” recession and deflation risks have decreased.

FX intervention has been effective, he says, and it continues ad hoc.

The next step could be a fixed FX target, he says, (a scary prospect if that target is much higher and you happen to be short EUR/CHF)

Jordan dismissed criticism of the SNB intervention as a “beggar thy neighbor strategy” and that there is no currency “war”

EUR/CHF has rebounded above the 1.5400 level on the comments. A central bank was spotted selling around these levels earlier today. My guess is listening to these comments, they’ll refrain for now.

EUR/CHF is trading at 1.5380 at writing, slightly lower on the day having opened in Europe around 1.5395. Sources report that the BIS has been capping the topside today, having been seen selling above 1.5400 earlier.

The bank is probably booking a few profits on all the EUR/CHF it bought just ahead of the SNB announcement that they intended to intervene to weaken the swissy.  Wish i had some friends like the SNB.

Downside remains limited due to fear of renewed SNB activity.  Any downside retracement toward 1.5180/00 (if we see it) should ellicit good buying interest, as this is the area many feel SNB will  aggressively defend.

The SNB are trying to draw a line in the sand at 1.5180 and they are expected to be there buying should the market dip. As can be seen on the accompanying hourly chart, we have a developing classic continuation flag pattern with a spike low at 1.5172 and a broader base at 1.5270. Buy dips here with stops below 1.5160 and a minimum profit target at 1.5450, the flag top.

And remember, only enter a trade if you like it yourself. Don’t be swayed by others because then you will generally lack commitment and stuff it up!

EUR/CHF has ticked higher, back over 1.5300, presently at 1.5330.  According to market sources there is a lot of speculation the SNB has been active, but no one reports having seen the bank directly. Some feel the SNB might be intervening through an intermediary. Could be I guess, anythings possible. Suffice it to say, with all the scuttlebutt doing the rounds, downside for the cross looks limited.

EUR/CHF is trading lower so far today, presently down at 1.5295 from an opening in Europe around 1.5385. The market continues to probe for renewed SNB interest. They just might be close to igniting it…….Watch this space.

One source opined that 1.5280/90 was the last level the SNB intervened at.

The USD/CHF has fallen to its lowest level in 6 days this afternoon, trading at a low of 1.1778. We should now head back to 1.1670.

EUR/CHF is trading markedly lower on the day, presently down at 1.5320 compared to a European opening up around 1.5420. The market seems content to test the SNB’s resolve. So brave, so brave!!!

In an interview in todays Financial Times, SNB head Roth basically said that the bank has made a commitment, and has a  strategy, to ensure the swiss franc doesn’t strengthen. On that basis, still gotta think downside for EUR/CHF has to be relatively limited.

Supports for cross now seen at 1.5315, 1.5285/90, 1.5265 and 1.5195.  There’s still a feeling  about, that SNB will draw a line in the sand down around 1.5180/00.

At writing comments from SNB spokesman have hit the wires and helped lift EUR/CHF. The official states that measures announced on Thursday are being implemented. Says CHF 4.75 bln covered bond deal between big banks, regional banks to be closed by end of month. Declines comment on whether SNB is buying covered bonds itself.  Just seeing those three letters SNB on the wires is enough to send the swissy bulls scurrying.

EUR/CHF remains bid, presently at 1.5415.  Comments made by SNB head Roth in the Financial Times have been duly noted.  The official states “We have clearly shown what our commitment is and the market has reacted accordingly” adding “we have a clear strategy…if the market comes back to the situaion presented.”

There remains a feeling SNB will draw a line in the sand down around 1.5180/1.5200. Downside for cross as a result pretty limited. Still much talk of an early test of 1.5500.

EUR/CHF is retaining its bid tone, presently up at 1.5420 compared to a European opening down around 1.5370.  Obviously there is palpable wariness concerning further SNB intervention and 1.5180-1.5200 remains the area many feel would ellicit further intervention. As a result, the downside for the cross looks pretty restricted.

Also the improvement in risk sentiment is helping erode swissy’s safe haven premium and this is weighing on the currency. As mentioned in earlier commentary , 1.5500 remains a much-touted short-term target and we’re probably headed higher than that in due course.

USD/CHF presently at 1.1865 has hardly budged on the day against a backdrop of USD weakness elsewhere, this reflecting swissy’s own underlying weakness at the present time. Fear of further SNB intervention remains palpable, limiting the downside for USD/CHF and particularly the EUR/CHF cross.  The generally better risk sentiment will also be eroding swissys’ safe haven premium. EUR/CHF sits presently at 1.5380, with still much talk of a short-term move to 1.5500 area.

Morning Asian trading has seen the closest stops, those in the EUR/USD below 1.2860 taken care of as we bounce back to the 1.2880/90 region. The EUR/USD needs to break above last weeks high around 1.2960 and this should take us to our next level of interest at 1.3100.

• US trade deficit slips to $36 bln in January, lowest in 6 years
• Canadian trade deficit $933 mln; largest on record
• Canada loses 82,600 jobs in February, unemployment rate 7.7%
• US consumer sentiment rises to 56.6 (preliminary March) from 56.3 (final February)
• Canadian finance minister says Europe needs to do more on toxic bank assets; US “needs work” on banks; Hopes for concrete action from G20
• UK’s Darling keeping options open on additional stimulus
• Japan may use missile defense against North Korean “satellite”
• Canadian PM and FM say to expect more job losses in Canada
• S&P 500 closes up 0.8%, up nearly 11% for the week
• Over the weekend watch the G20 meeting in London and the OPEC meeting in Vienna

EUR/USD traded in muted fashion for most of the US session, consolidating the gains made late Thursday. US equities continued to advance, albeit at a modest rate, on Friday, helping limit dips in the pair. New York range 1.2860/1.2937

USD/JPY and EUR/JPY saw a sharp round of selling at mid-morning in New York. A headline in the British press highlighting Japan’s threat to shoot down a North Korean long-range missile that is said to be being readied for a satellite launch. Both legs recovered in the afternoon with equities ending the session on a firm note. Japan’s finance minister said there were no discussions of forex rates between the US and Japan. Some see that as a sign that the US would not mind Japanese intervention. New York range 97.76/98.47, 125.95/127.28

CHF was sold heavily during the US morning by overlay managers. these accounts manage currency risk for investors and corporations and tend to take a long-term view. They are the antithesis of the hyperactive momentum trader. EUR/CHF reached 1.5400 before backing off. New York range 1.5290/1.5400

The Loonie traded on a firm note despite lousy economic data. Dealeradded to CAD shorts early in the week and got a queasy felling from dollar weakness elsewhere. USD/CAD fell to 1.2628 after all the data was out of the way and weak longs were washed out. It rebounded to close at 1.2725. New York range 1.2624/1.2842

Dealers have had a busy week and many are pretty much ready to wash their hands of the market and begin looking to the weekenhd. Algorithims willl take up the slack, marching EUR/USD higher and lower in locks-step with the S&P until a pocket of liquidity is identified. Then, they’ll all run the other way.

The biggest risk for the rest of the day is the stray “tape bomb” coming out of London from some unidentified G-20 official spouts off to the wire-service reporters.

EUR/JPY found a pock of liquidity at 126.80 a short while ago and has consequently firmed to 127.15. Stocks have firmer and are up a bit less than 1% at mid-morning in New York.

Keep an eye on the 16:00 GMT fixing. We could see another wave of Swiss sales from long-term accounts at that time.

EUR/CHF has caught a bid over the past hour or so, presently up at 1.5385. There are still no signs of the SNB, but sources report  “overlay managers” selling swissy. They are long-term players who manage currencies for asset managers and corporations.  As one source put it “they tend to act infrequently, but when they do its decisively.”  Still much talk of EUR/CHF testing 1.5500 in very near future.

EUR/CHF is trading lower, presently down at 1.5285 from a European opening around 1.5330, as the market probes for signs of SNB interest. So far there haven’t been any reports of the SNB being active. As mentioned earlier there seems to be a growing opinion that the swiss central bank will endeavour to defend the 1.5180/00 area.

EUR/CHF is pretty steady in early European trade after yesterdays’ fun and games, presently at 1.5360.  Downside looks pretty restricted.  Seems to be alot of talk of the 1.5180-1.5200 area being where market participants would expect aggressive SNB action. Having said that, some feel we might even see the SNB try and catch the market on the hop and intervene again today up at these lofty levels. Seems to be fairly high expectations of a short-term move to 1.5500.

EUR/CHF and USD/CHF are consolidating their big overnight gains and more is on the way I feel. If you feel like picking a top in either- take a cold shower, turn off your screen and come back Monday. We cannot be sure when or where either move will stop so the upside risk greatly outweighs the downside reward. Early Europe may start booking some profit but each dip will merely be an excuse for the zillions of real-money CHF long positions to start reducing their exposure (and yes of course I’m talking my book).

Please take the time to view the attached Global Economic Calendar to get an idea of what we have in store for us tonight. Nothing much happening Asia today but pay attention in Europe and NY as it could be another fun night!

If recent history is anything to go by, Asia will sell the JPY crosses today and frustrate those who had expected an upsurge in trend momentum. I nevertheless will continue to stick with my long AUD/CHF position (which I still believe is 20% undervalued!) and on a day-trading basis, I will look for buying opportunities in EUR/CHF, EUR/JPY and AUD/USD as all three have now broken through very important resistance levels.

The Swiss National Bank have taken decisive action overnight to stem the strengthening of the CHF and therefore ease a huge burden which was being placed on Eastern European loans and mortgages which were taken out in Swiss Francs. This action will do much to alleviate angst, at least in this quarter of the market. Based on their previous track record, the SNB will now draw a line in the sand, Jamie was calling it 1.5180 against the EUR, and they will vigourously defend this level.

EUR/JPY has broken above 126.00 and technically looks headed for 134ish. USD/JPY is in a wide 92-102 range and the middle is best avoided. AUD/USD should now go higher and the next level of interest is the 100-day MA at .6615.

Good luck today.

• US retail sales fall less than expected, -0.1%/0.7% ex-autos
• US weekly jobless claims rise to 654k/continuing claims 5.317 mln, a record
• SNB cuts Libor target 0.25, narrows corridor it to 0-0.75%, buys foreign currency and bonds
• US business inventories fall 1.1%
• US household net worth fell $11.2 trln in 2008
• GM says does not need scheduled government payment of $2 bln this month
• Powerful congressman tells SEC, FASB to fix mark-to-market “or Congress will”
• General Electric losses AAA rating; stock rises
• BOEs Barker sees economy worsening
• German finmin says Germany would aid Ireland if need be
• US equities rise 4%, oil jumps 11%

EUR/USD surged late in the day, fueled by rising US equities and a clear signal from Germany that it would aid Ireland if need be. A secondary support came via the massive intervention undertaken by the Swiss National Bank. Not only did they buy Euros directly against the CHF but their intervention helped strengthen Central European currencies versus the Swiss franc. This will benefit those holding CHF-denominated mortgages in CEE and should help bolster European banks. Ultimately, the euro itself is a beneficiary.

EUR/USD reached 1.2945 very late in the US session. It now targets 1.2990.

EUR/JPY broke through 126.10 amid a broad wave of Euro buying late in the day. It reached 126.40 before consolidating  above 126.10.

EUR/CHF 1.5337 late in the day. The SNB bought in excess of a combined $15 bln in EUR/CHF and USD/CHF and parked itself on the bid in the 1.5180 region on pullbacks. SNB president Roth said the SNB intends to keep the Swiss franc from strengthening further against the euro. Dealers will be on guard for further intervention to maintain a weaker franc.

USD/CHF reached 1.1965 before easing a bit as the dollar fell in the afternoon.

Cable was dragged higher by EUR/USD but MPC Barker reiterated how the UK is benefitting from the lower pound, saying it is an important stimulus. It closes at 1.3945 after reaching 1.3980/85.

AUD/USD overcame the 0.6560 barrier option that had contained that market for weeks on end as hopes for a reflating global economy are spurred by the rise in equities and commodities. 0.6641 is next resistance for the Aussie.

Shorts are feeling the heat on Wall Street as bank stocks experience a continue short-covering rally. An 11% rally in crude is spurring oil stocks and the index are seeing covering as well. The S&P is up 4.25% with 10 minutes to go. Bear market rallies are the most vicious kind.

EUR/USD continues to grind higher, now at 1.2930. EUR/CHF is at session high at 1.5309 and EUR/JPY is consolidating above 126.10 but lagging the pace as USD/JPY starts to give ground, now at 126.18. USD/JPY has eased to 97.55.

Dealers say the SNB is still lurking about, bidding for EUR/CHF at 1.5180, interesting in that it is past closing time in Zurich. SNB President Roth is speaking as well, saying he wants to avoid a further rise of the Swiss franc versus the euro. Looks like he is willing to match his words with deeds.

Also of note was a decent-sized buyer of USD/JPY a short while ago which briefly boosted USD/JPY to 98.23 before it stalled.

EUR/USD is underpinned this afternoon as US equities enjoy a continued rally. They are up a bit better than 2.2%. We trade at 1.2820. Offers remain at 1.2850.

One consequence of the SNB intervention to weaken the Swiss franc, intended or otherwise, is that CHF-denominated mortgages which were extended all across central and eastern Europe are now a bit cheaper for Poles, Czechs and the like to fund. Fewer foreclosures leads to better capitalized banks and ultimately a stronger euro, connecting all the dots.

Keep in mind this is just one factor among many impacting the EUR but should be included in the mix.

Already though the Polish Zloty and Czech Krona are several percent firmer versus the euro and even more vis-a-vis the Swiss franc.

Banks allocate a certain amount of credit to one another on the electronic trading platforms. Usually they are in the hundreds of millions if not billions of dollars for the major players. The SNB’s intervention has been so aggressive that he is filling up his credit limits with the major banks and is now forced to “go direct”, dealing directly with market-making banks without any intermediary. Looks like he has a point to make…

The SNB says the Swiss franc’s rise represents an inappropriate tightening of monetary policy and it has decided to buy foreign currency in the foreign exchange market to prevent any further appreciation of the Swiss franc against the euro.

I know a man called Sean, who lives in Sydney, who will be more than a little happy with this swissy weakness.

EUR/USD is not used to playing second fiddle, but today it is far from the spotlight. Early it was JPY that took a start-turn. Now it is the Swissy that is the currency du jour. It has gone into free-fall since the SNB announced it would sell the unit against the euro to offset the tightening impact of a too-firm currency, in their opinion.

US equities have turned to the downside, which could help spark a dollar rebound but EUR/USD dips should be cushioned by EUR/CHF demand. Small bids are seen at 1.2790 and 1.2770 on pullbacks.

Add another member to the Quantitative Easing club. The US, UK and Canada are already in the club founded by Japan earlier this decade and just joined by the Swiss. They will buy bonds and foreign currencies to stimulate the economy. The SNB is already buying EUR/CHF, sending the pair to 1.5085, up more than a centime since the announcement.

The ECB is the last major central bank to hold out.

EUR/CHF is rallying strongly, presently up at 1.4835. There are growing expectations the SNB will try and engineer a weaker CHF at their rate announcement at 13:00 GMT/09:00 EST.  Sources report sell orders lined up at 1.4850.

One thing i look at pretty closely in order to determine the direction to trade in is whether the 5 is above or below the 15 day MA. When this is not the case, it is best to keep positions smaller than usual as their is a greater risk involved with achieving success. When the MA’s are supportive of the direction it is best to use a buy on dips (sell on rallies) approach combined with looking buy/sell breaks.

The EUR/USD just so happens to have seen the 5 cross above the 15 day MA, and those of you interested in history, this is the first time this has happened since the break below 1.3800, back in early Jan. I am not saying this is the ONLY factor you should be basing a trade decision on, but it should determine which side you play from, we then have to use a bit of market knowledge and technical analysis skills and look for the appropriate levels to get in relative to our stop loss placement.

For now, the 1.2880/00 region is the important level for the EUR/USD on the topside, with a break above this level likely to yield a move to 1.3100, a break of which opens the way for a move back to the imporant 1.3400 level. I now expect to see support ahead of the 1.2700 level and as such would be looking to buy on dips to 1.2750 and again at 1.2700 with a stop below 1.2600 which we will raise once we take out 1.2900.

Plenty out to keep us amused data wise and words of wisdom wise for the remainder of the day and night. Far too many to list here, so please make yourself familiar with the attached table.

Dealers note a German news wire ran a headline saying the Swiss National Bank cut its Libor target by 25 bp. The SNB does not meet until tomorrow, it should be noted. The headline ha been retracted, we’re told.

EUR/CHF spasmed nonetheless, spiking to 1.4813 before sliding back to 1.4770. it is now at 1.4785

Swissy remains relatively weak, with the EUR/CHF cross up at 1.4780 compared to a European opening around 1.4735.  The currency isn’t being helped by the proximity of tomorrows SNB  rate decision. It is widely expected the bank will trim rates 25 bps, but that’s not the problem. There is palpable wariness over what the SNB might possibly say regarding quantitative ease/intervention. Until this out of the way, swissy likely to stay on the back foot.

While its someways away, it’s probably worth mentioning again. Sources report a “large” stop loss buy interest lined up at 1.1715/20 in USD/CHF. We’re presently down at 1.1550.

Swissy remains under the weather with the EUR/CHF cross presently up at 1.4735 compared to a close in Europe Tuesday around 1.4710.

The weakness comes despite the general safe haven flows seen in the wake of the weaker than expected Chinese trade data, and is evidence of the caution surrounding tomorrows SNB rate decision.

The Swiss central bank is widely expected to trim rates 25 bps., but it isn’t the prospect of a rate cut that is elliciting caution, rather its what they may say regarding quantitative easing/intervention.

EUR/USD has come lower in early afternoon trade, now down to 1.2725. The strong link with US equities has broken down and central bank demand in the 1.2555/60 area that supported the EUR/USD on earlier pullbacks did not materialize this time.

EUR/CHF has come off as anticipated, now at 1.4678. When international tensions flash the Swissy tends to do fairly well, given its time-honored policy of neutrality. Chinese harassment of a US naval ship is the spark for the Swiss strength.

Remember the downing of a US spy plane by China in the early months of the Bush administration? It looks as though Beijing is taking the measure of President Obama in his first months. They have been harassing a US spy ship in international waters, according to reports.

Reuters reports the head of US intelligence (not sure who that is these days, Panetta at CIA?) says the harassment is the worst since the 2001 incident.

Markets don’t like uncertainty, especially between two nuclear-armed world powers. CHF might outperform under the circumstances. The Franc has been weak today as the safe-havens give back gains. It trades now at 1.4705 versus the euro.

EUR/USD is not used to playing second fiddle, but today it is far from the spotlight. Early it was JPY that took a start-turn. Now it is the Swissy that is the currency du jour. It has gone into free-fall since the SNB announced it would sell the unit against the euro to offset the tightening impact of a too-firm currency, in their opinion.

US equities have turned to the downside, which could help spark a dollar rebound but EUR/USD dips should be cushioned by EUR/CHF demand. Small bids are seen at 1.2790 and 1.2770 on pullbacks.

Add another member to the Quantitative Easing club. The US, UK and Canada are already in the club founded by Japan earlier this decade and just joined by the Swiss. They will buy bonds and foreign currencies to stimulate the economy. The SNB is already buying EUR/CHF, sending the pair to 1.5085, up more than a centime since the announcement.

The ECB is the last major central bank to hold out.

EUR/CHF is rallying strongly, presently up at 1.4835. There are growing expectations the SNB will try and engineer a weaker CHF at their rate announcement at 13:00 GMT/09:00 EST.  Sources report sell orders lined up at 1.4850.

One thing i look at pretty closely in order to determine the direction to trade in is whether the 5 is above or below the 15 day MA. When this is not the case, it is best to keep positions smaller than usual as their is a greater risk involved with achieving success. When the MA’s are supportive of the direction it is best to use a buy on dips (sell on rallies) approach combined with looking buy/sell breaks.

The EUR/USD just so happens to have seen the 5 cross above the 15 day MA, and those of you interested in history, this is the first time this has happened since the break below 1.3800, back in early Jan. I am not saying this is the ONLY factor you should be basing a trade decision on, but it should determine which side you play from, we then have to use a bit of market knowledge and technical analysis skills and look for the appropriate levels to get in relative to our stop loss placement.

For now, the 1.2880/00 region is the important level for the EUR/USD on the topside, with a break above this level likely to yield a move to 1.3100, a break of which opens the way for a move back to the imporant 1.3400 level. I now expect to see support ahead of the 1.2700 level and as such would be looking to buy on dips to 1.2750 and again at 1.2700 with a stop below 1.2600 which we will raise once we take out 1.2900.

Plenty out to keep us amused data wise and words of wisdom wise for the remainder of the day and night. Far too many to list here, so please make yourself familiar with the attached table.

Dealers note a German news wire ran a headline saying the Swiss National Bank cut its Libor target by 25 bp. The SNB does not meet until tomorrow, it should be noted. The headline ha been retracted, we’re told.

EUR/CHF spasmed nonetheless, spiking to 1.4813 before sliding back to 1.4770. it is now at 1.4785

Swissy remains relatively weak, with the EUR/CHF cross up at 1.4780 compared to a European opening around 1.4735.  The currency isn’t being helped by the proximity of tomorrows SNB  rate decision. It is widely expected the bank will trim rates 25 bps, but that’s not the problem. There is palpable wariness over what the SNB might possibly say regarding quantitative ease/intervention. Until this out of the way, swissy likely to stay on the back foot.

While its someways away, it’s probably worth mentioning again. Sources report a “large” stop loss buy interest lined up at 1.1715/20 in USD/CHF. We’re presently down at 1.1550.

Swissy remains under the weather with the EUR/CHF cross presently up at 1.4735 compared to a close in Europe Tuesday around 1.4710.

The weakness comes despite the general safe haven flows seen in the wake of the weaker than expected Chinese trade data, and is evidence of the caution surrounding tomorrows SNB rate decision.

The Swiss central bank is widely expected to trim rates 25 bps., but it isn’t the prospect of a rate cut that is elliciting caution, rather its what they may say regarding quantitative easing/intervention.

EUR/USD has come lower in early afternoon trade, now down to 1.2725. The strong link with US equities has broken down and central bank demand in the 1.2555/60 area that supported the EUR/USD on earlier pullbacks did not materialize this time.

EUR/CHF has come off as anticipated, now at 1.4678. When international tensions flash the Swissy tends to do fairly well, given its time-honored policy of neutrality. Chinese harassment of a US naval ship is the spark for the Swiss strength.

Remember the downing of a US spy plane by China in the early months of the Bush administration? It looks as though Beijing is taking the measure of President Obama in his first months. They have been harassing a US spy ship in international waters, according to reports.

Reuters reports the head of US intelligence (not sure who that is these days, Panetta at CIA?) says the harassment is the worst since the 2001 incident.

Markets don’t like uncertainty, especially between two nuclear-armed world powers. CHF might outperform under the circumstances. The Franc has been weak today as the safe-havens give back gains. It trades now at 1.4705 versus the euro.

UBS just sent around an interesting note to clients in which they raise the idea of the SNB potentially adopting quantitative ease. The trouble for the Swiss (if you want to call it that) is that they have a tiny bond market and only a tiny sliver of that tiny bond market trades freely. Most is held by long-term portfolios.

So if the SNB wanted to weaken the franc, they could buy foreign bonds, UBS suggests. US governments and German bunds would be the most likely candidates, we’d guess. If they make that move, look for EUR/CHF to rally.

EUR/JPY: probably still the leading indicator for major forex moves- needs to break above 125.75/126.00 to maintain its bullish momentum

EUR/CHF: 1.4650 was the major breakdown level on Friday but the market couldn’t close below there. This now becomes an important short term pivot point.

AUD/USD: major option barriers still in place at .6280-.6560

EUR/JPY: As we have been writing for weeks now, the wind has changed direction here somewhat but whether we are seeing a period of bearish consolidation or a partial retracement remains to be seen. The big level to watch now is the recent top at 125.75 and a break above there will see technicains calling for a move to the 38.2% at 134. The initial move this morning is higher, so there may be some stops above last Thursdays’ spike high at 124.95 which the market is gunning for.

EUR/CHF: I am totally biased here so my views are less than objective. Nevertheless, after the break below 1.4650 on Friday and then spending two sessions trading well below that level, the failure to close below it will certainly have bears questioning their commitment.

Sean has been all over this story like a rash of late, and it may be turning his way. The Swiss foreign minister is quoted on Reuters as saying he is considering “wider cooperation” with the US on tax matters.

Once the Swiss begin cooperating with one tax authority, it will have to cooperate with all others, and the mystique of Swiss bank secrecy will lost to the ages. This is a potential big blow to the franc. EUR/CHF is not far from session lows, now at 1.4606. It traded as high as 1.4699 this morning.

EUR/CHF is getting alot of attention at present.  Swissy has made some decent gains overnight, the cross presently down at 1.4640 having closed out around 1.4735 in Europe  Thursday. Indeed the cross reached 1.4580 at one stage before recovering.

The are a myriad of reasons being given for the move.  Some mention the ECB’s bleak outlook for the euro-zone economy, with more rate cuts on the way. Some mention swissy’s safe haven status coming into play against the backdrop of growing concerns over General Motors and the global economy as a whole. Some see the CHF appreciation partly as a relief rally, with the Swiss authorities wanting to develop swiss secrecy laws rather than dismantle them. Some see the move partly tied to eastern block mortgages which were financed in swiss francs and are now going sour. I’m sure there are other factors at play here, but there’s a few for consideration.

As mentioned earlier, we’re presently at 1.4640.  Technical support is seen at 1.4545 and then important 1.4500. Some technicians see any breech of 1.4500 opening up a move to 1.4300.

The CHF crosses are headed lower again as early Europe enters the fray. The break below 1.4650 in EUR/CHF was a major technical event and we are now seeing some longs bailing out of positions in GBP/CHF, AUD/CHF and other more exotic crosses. EUR/CHF is currently quoted at 1.4610 and the next target is 1.4520, as per Kyles’ technical piece from earlier today.

This is a notoriously thin pair during the Asian session and I am reliably informed that there are some sizeable stops below 1.4650 from some longer term accounts. Presently, EUR/CHF is trading just below 1.4700 so the stops may just be far enough away to keep them safe until Europe comes in.

Good luck today.