EUR/CHF: A History of Interventions, March 2010

Traders report a large barrier option is in play at the 1.4200 level in EUR/CHF. Nothing attracts price action like a big barrier. The owner of the option wants to protect his investment while the bank that sold the option wants to knock it out to erase its potential exposure.

1.4232 was the low for the move last week before back-up plan for Greece was unveiled.

Traders are increasingly daring the SNB to put their money where their mouth is…

EUR/CHF up very slightly at 1.4310 from early 1.4295.

The official also says expansionary monetary policy is appropriate at the present time.

EUR/CHF has now added 60 pips during the Asian session and EUR/JPY is back at 124.60 as recent EUR shorts start booking profits. The AUD has been even more impressive against the CHF and JPY, both up over 1% on the day. It will be interesting to see what Europe makes of all this. EUR/JPY resistance is quite solid close to 125.20 but the stop above 125.50 and 70 are said to be significant. I think that might be the pair to watch over the next session or two.

This pair doesn’t normally do a whole lot during the Asian session but it has moved 40 pips higher in the last few hours despite the EUR/USD losing some ground. In other words, USD/JPY and USD/CHF are leading the way higher and this is an interesting development in my opinion. The big breakdown level in EUR/CHF was at 1.4300 and now that we are back above there, it is not surprising to be seeing some short covering.

EUR/USD closed at 1.3415 but has been as high as 1.3525 in the early interbank market and is currently sitting around 1.3490. EUR/CHF is trading  at 1.4300 and cable 1.4965. The general lack of fall out form the Greek rescue deal will be further encouragement for EUR shorts to cover their positions

Good luck today.

• Sees 2010 growth 1.7% (up from previous 0.6%)
• Sees 2011 growth 2.2%  (up from previously about 1.5%)

Meanwhile EUR/CHF has advanced as high as 1.4312 so far this morning, presently at 1.4305.

Presently up at 1.4290 from North American close Thursday down around 1.4260 amid talk of Swiss names buying.  Do they know something we don’t, or are they just booking profits? Who knows, I don’t.

The break below 1.34 is looking like a critical event for the EUR/USD and further losses look highly likely. If EUR/JPY turns bearish anytime soon then that might well be the catalyst for the next big downmove in the EUR/USD. EUR/CHF is consolidating below 1.4300 and rallies there must be viewed as selling opportunities in the current environment. Cable also looks fairly sad and a clean break below the previous 1.4780 low will likely usher in fresh waves of selling.

Good luck today and TGIF.

• Euro zone has a problem and Switzerland is suffering from it
• Level of euro is a cause of some concern for Switzerland

EUR/CHF steady at 1.4270, pretty much where it started out this morning.

Those waiting for Jordan’s comments will be disappointed as his speech is i bank regulation, specifically how the SNB plans to deal with the twin Swiss behemoths, UBS and Credit Suisse.

No comment yet on monetary or FX policy. Look for reporters to try and button-hole him after the speech.

EUR/CHF dipped to 1.4265 from near 1.4280 after it became clear there would be no CHF-negative commentary…

Demand for USD/CHF is pushing up EUR/CHF, but Swiss banks say order books are extremely sparse. Bids remain reumored on dips to 1.4200 but few can prove it. Expect resistance toward 1.4300, the old “all time” low. Liquidity is said to be very porr in EUR/CHF at the moment.

The pair is at a record low of 1.4255 and could well be the primary driver for the rest of the session. As I mentioned earlier, there is somewhat of an expectation that the SNB will be seen around 1.4200 but it’s ulikely they’ll show up in this timezone again after the last episode.

Now that’s not something we say everyday. The EUR wants to go down but the Sovereign players are holding it up. It may hold up the first time but all such moves eventually fail. GBP also should be going lower but the market is already short and unable to generate enough momentum at the moment for a fresh downmove. AUD grinds higher and the JPY grinds sideways. That leaves those wild Swiss party animals and their mad gyrating currency to generate some volatility in the FX market. Sock drawer I think.

Good luck today.

I just got a note from ‘the inside’ which says that Swiss banks expect the SNB to re-appear around the low 1.42′s in order to slow down the current fall in EUR/CHF. The big Swiss banks such as UBS and Credit Suisse have traditionally had a very close working relationship with their central bank. I’d suggest waiting for the SNB bids to appear, let the first rally happen, and then buy the next dip as we will then know where the new line in the sand is.

A month ago the euro would have been circling the drain on a headline like the one that crossed Bloomberg just after 15:00 GMT that Austria does not rule out kicking Greece out of the euro.

When prices didn’t drop, traders set about covering shorts, ramping EUR/USD as high as 1.3555.

Risk aversion is still in the air, as seen in EUR/CHF. We just fell through the 1.4300 old lows and fell to 1.4295 before bouncing.

Our cup runneth over.

• SNB has means to fight excessive franc rise
• Can buy very large quantities of foreign currency
• Franc rise excessive if it leads to materialisation of deflation risks. SNB position clear; it will not allow materialisation of deflation risks
• Performance of swiss economy, not fx level, sign of intervention success

Yada, yada, yada…….

EUR/CHF sits at 1.4345, where it closed out Monday in North America.

EUR/CHF siits at 1.4355, little changed from a North American close Monday around 1.4345.  Yesterday we saw decent bounce from 1.4310 low, amid talk of 1.4300 barrier option interest.

Swiss National Bank Chairman Hildebrand is up in 15 minutes or so (07:30 GMT)

Or the morning, depending on your local. Sean will be joining us mid-session in Asia, so I will be manning the helm for a few more hours…

Risk trades have been in recovery mode for most of the US afternoon after a very rocky early New York session.

Things got so bad that EUR/CHF fell to within 10 pips of its all time low, touching 1.4310, as Greece fired back at Germany. That cross ends the NY session at 1.4345.

EUR/CHF having opened lower, down at 1.4345 from a North American close last week up around 1.4360, has slipped further in early European trade as the SNB continues to stay at home.  We’re presently at 1.4327.

Some feel the absent central bank might just turn up ahead of 1.4300, where there is rumoured to be barrier option interest. We’ll see soon enough I guess.

The spike low in November 2008 after the Lehman closure was 1.4300. The subsequent rally went to 1.5800 and now this traditionally very stable pair has retraced this entire rally back to 1.4300, almost. If 1.4300 is re-tested and an hourly base forms, the risk/reward in entering a long position with a fairly tight stop-loss will look very enticing.

EUR/CHF has come under renewed pressure this morning, presently down at 1.4370 from early 1.4400, comments made by SNB’s Danthine yesterday still resonating.

Talk of 1.4350 barrier option interest in place and as such might expect some defence of said level. Stops tipped just below.

EUR/CHF took most of the limelight after the SNB comments seemed to suggest that they’d learned their lesson and were leaving the market to decide on currency levels. The heavy selling of EUR/USD earlier in the week by Swiss names is now being linked to EUR/CHF sales. The EUR also lost significant ground against all the other majors and there are some important levels looming in EUR/USD below 1.3550, with some big stop-loss orders just below there.

Good luck today and TGIF.

SNB’s Danthine says he has nothing further to say on the policy effects on exchange rates, apparently sticking with his earlier warning to prepare for market rates, implying the end for SNB intervention.

EUR/CHF slipped as low as 1.4355 and trades now at 1.4390. 1.4460 is first resistance on rebounds…

Like a Swiss chocolate left on the dashboard of a car EUR/CHF is melting after comments from a new SNB board member. Prepare for higher interest rates and no FX intervention, M. Danthine said. That’s a name Swiss bears won’t soon forget.

The cross trades now around 1.4370 with little support seen until 1.4300.

I refuse to trade pairs where there is intervention happening as it distorts the market and it’s usual workings. The danger (as the Bank of England learned all those years ago) in trying to put a floor on a currency is that when the floor disappears, the fall can be quite spectacular. There’s not much in the way of technical support until the 1.43 spike low. Resistance is at the previous floor of 1.4620.

Traders report that there had been lots of buying of short-dated downside protection in EUR/CHF (bearish bets)  in the last few sessions in the run-up to the SNB meeting, hoping the SNB would soften their tone on keeping the franc weak. Oops…

Beware a squeeze higher should the SNB come in and inflict pain on these fresh shorts.

We trade at 1.4622, having been as high as 1.4230 after the SNB held rates steady and said they would continue to keep the franc from strengthening.

Swiss National Bank due to announce rate decision at 13;00 GMT.  It’s not really the rate decision which is awaited if truth be told.  There is a strong consensus rates will be left on hold at 0.25%. Rather the market will be watching for any change in rhetoric regarding swissy strength. At December’s meeting SNB said it was choosing to prevent “excessive appreciation” as opposed to previous “any appreciation.”

Any further percieved, or actual, softening in tone would likely see 1.4600 in EUR/CHF  give out in double-quick time.

Right has that woken anyone up.

Swiss National Bank is said to be sitting on the bid in EUR/CHF at 1.4610.

I think I might go back to bed for a few hours kip. Boring, I should coco.

Cross up at 1.4629 from session low 1.4612.

Demonstrably stronger than median forecast calling for +2.3%

December’s rise of 4.7% was downwardly revised to 4.4%.

EUR/CHF continues to trade in very steady fashion around 1.4630.

Traders also report stop-loss sell orders in USD/CHF from 1.0700 down to 1.0680

Traders report a fresh batch of stop-loss sell orders are building just below the 1.3500 level as the market continues to slosh to and fro, consolidating its recent losses. Rebounds remain shallow, and until we get above 1.3700, bears remain comfortable and in control.

EUR/USD is getting a modest lift from another SNB drive-by attack on EUR/CHF. We spiked to 1.4657 from 1.4623 in two minutes and now trade at 1.4638.

EUR/GBP is rebounding late in the session, rebounding to the 0.9087 level after a dip to 0.9050 a short while ago.

Talk of 0.9100 barriers made the rounds earlier in the session…

Swiss Q4 GDP has come in at +0.7% q/q, +0.6% y/y, demonstrably stronger than median forecasts of +0.4%, -0.4% respectively.

EUR/CHF continues to do very little, presently at 1.4633. Seems market wary of pushing toward 1.4600 line fearing it could awaken the SNB.