EUR/CHF: A History of Interventions, May 2010

The big Sovereign players couldn’t get enough of the EUR when it was at 1.40 and now it looks like they can’t get out quick enough. The BIS has been a regular seller on behalf of other central banks, the SNB are quietly trying to offload what they bought at 1.40 and the Asian central banks who are intervening by selling USD/Asia and trying to rebalance their books by selling EUR/USD. Now China is revaluating its EUR bond holdings. Looks like there’s lots more downside in the EUR as the buyers are now almost non-existent.

Good luck today.

I think the SNB is legging out of some of their massive EUR/CHF stockpile.

The BIS has been a heavy seller of EUR/USD today, which helps push up USD/CHF. Heavy offers then come in to cap the USD/CHF? Could it be the SNB offering the USD/CHF? That would be my bet…

Traders report strong offers in USD/CHF now between 1.11560 and 1.1580…

• USD/JPY: corporate offers 90.60/80; stop-loss buy orders above 90.90
• EUR/USD: talk of Sovereign offers 1.2400
• EUR/GBP: large option interest rumoured around .8400 which might attract market in coming sessions
• EUR/CHF: talk in market that Swiss banks are selling above 1.4350 (thought to be SNB lightening up on longs)

Order books are quite empty compared with the normal situation which is little surprise given the extreme volatility seen over recent days.

• AUD/USD: strong buying interest shown by hedge funds today below .8200
• USD/JPY: tied in between substantial buying interest starting at 89.40/50 and sell orders grouped around 90.65/80. Talk of plentiful stop-loss buy orders above 90.90 and 91.20.
• EUR/USD: looks like order books are cleared out close to the market apart from some light stop-loss sell orders below 1.2470
• GBP/USD: sell orders capping around 1.4500 but stops presumed to be building tight above this level

• Most directors thought swiss franc not misaligned, recent franc rise mostly reflects strengthening findamentals (SNB will love that one)
• IMF endorses Switzerland’s intention to return to free-floating currency regime
• Any swiss currency intervention should be limited to resisting disruptive pressures

Just think Swiss National Bank’s job just got a little bit harder.  EUR/CHF at 1.4400.

EUR/CHF used to move about 30 pips in a week. Today we’ve seen it go up 250 pips and then drop 200 pips, and thats before Zurich really gets going. I wouldn’t be at all surprised to see the SNB using its strong relationships with UBS, CS etc to start off-loading some of the 20+ billion EUR/CHF it’s thought to have bought over the last few weeks (thanks Iman). Sell silly rallies would seem to be the best strategy here.

Dealers during the NY session said that offers were particularly heavy around the 1.2600 region and we are currently retesting that area. Talk of heavy stops above 1.2620 and buying dips still looks like the way to go in this short-covering environment. Stops now done above .8750 in EUR/GBP (thanks Spooner) and option plays drove EUR/CHF higher (thanks Derrick).

I’ve heard from two different sources that the bids around 89.00 last night in USD/JPY were exceedingly large and both parties are of the same view that semi-official intervention was taking place. This would be no surprise as the Japanese authorities have said in recent months that they will act to curb excessive JPY strength. With intervention by the SNB, ECB, RBA and even the Fed joining in, it would be no surprise if the BoJ were also active.

That’s my take on the market situation. We’ve seen the sell-off in the AUD and if we look around the market another noticeable factor is the extreme strength in the EUR crosses; EUR/AUD, EUR/CHF and EUR/GBP have all made big gains. EUR/USD is still lagging in my view. A base looks now to be forming and I expect support levels above 1.2400 to hold firm. A break above 1.2600 will trigger the really heavy stops and then we should expect the unexpected; I think 1.33/1.35 is possible on an extreme short squeeze.

It’s all about market positioning and liquidation and when conditions get like this, the moves will be extreme.

Down from 53.4 in April.

EUR/CHF sits at 1.4230.  Haven’t heard any talk of SNB activity in Europe this morning. Last I saw was Sean reporting the bank lined up down at 1.4220.

• Major option expiry at 1.4400 in cable, NY cut
• SNB last seen bidding around 1.4220 in EUR/CHF
• USD/JPY: unsubstantiated talk of Kampo bids around 91.00; definitely heavy stops below that level
• EUR/USD: solid selling interest around 1.2425, trailing stops above. Sovereign selling interest 1.2500/25.
• AUD/USD: more heavy stops below .8290

Just a reminder that the SNB were seeing buying on the dip last night at 1.4220 after they had earlier managed to drive the market 300 pips higher from 1.4000 to 1.43+.

Notwithstanding USD/JPY of course. The SNB are thought to have retreated to 1.4220/30 level now in the EUR/CHF and with markets now well off their recent lows we should not expect to see any threat of Fed or ECB during this session (unless the BoJ suddenly decides to join in and starts buying EUR/JPY).

Perhaps the central banks are getting a bit savvier about when and where to intervene. Gerry mentioned during the London session yesterday that the SNB soaked up 13 billion EUR/CHF before going on the attack and driving the pair 300 pips higher. Some accounts will have been very badly hurt. They also probably realised that some major technical signals were driving hedge funds to exit AUD longs against the European currencies, making it a good time to attack. Not a total game changing exercise but a reminder from the central banks that they are willing to take on the speculators, and even win a round or two.

Good luck today.

After ripping EUR/CHF as high as 1.4300 (wasn’t that area an old “line in the sand”?) the SNB has stopped chasing but has set up camp at the 1.4220 level. Gotta give them points for persistence. We trade now at 1.4240.

The SNB is going all-in!. EUR/CHF is rallying strongly, up to 1.4120 so far. Rumor has it they have bought 17 yards of EUR/CHF just today…

EUR/USD is getting a lift as well amid talk the ECB may not be far behind, according to a US think-tank.

Some 13 yards has been sold in EUR/CHF so far today (or bought if you want to put it a different way) with sources reporting a “smart guy” notable seller.  Last time just before 1.4300 gave out a Swiss private bank out of Zurich was a heavy seller. Could well be same entity doing alot of the selling today.

Where sell stops might be in EUR/CHF, just incase the SNB decides to relinguish it’s support of 1.4000 line.  Talk of decent-sized stops down at 1.3975.

Even EUR/CHF us seeing some short-covering this morning. The market has been leaning against SNB bids for days in the 1.4000 region and seems to finally be relenting as risk aversion eases for the time being.  The cross trades now in the 1.4030s after stalling a few times ahead of 1.4050. A move through 1.4070 will get the shorts excited and should prompt some more significant follow-through.

Up at 1.4040.   A US investment house is said to have been notable buyer in recent trade.

• EUR/USD: sell orders at 1.2400 including some Sovereign offers; decent sized stops above 1.2420; more sell orders towards 1.2500. Light stops below 1.2360, bids starting at 1.2325.
• EUR/CHF: heavy bids around 1.4000, stops below. Stops also topside above 1.4080 and 1.4120.
• USD/JPY: heavy stops above 93.65
• AUD/USD: Buy orders now at .8730 from corporates, heavy stops below .8700 might attract attention. Offers starting at .8820 through .8860 with real money sellers still seen.
• EUR/AUD: watch for some large trailing stops above 1.4250.

• EUR/USD: barrier protection ahead of 1.2500, stops below this level but bids also said to be plentiful. More barriers at 1.2450 with heavy stops below there. Sovereign offers now just below 1.2700.
• EUR/CHF: barrier protection ahead of 1.4000, SNB also expected at same level
• AUD/USD: trailing stops above .9040
• EUR/GBP: trailing stops above .8650
• USD/JPY: solid bids 92.50/55, heavy stops just below. Corporate offers starting at 93.00 with more solid offers at 93.65 still, stops above there.

I thought we were in for a very busy session but I’ve unfortunately been very disappointed. Most of the majors are trading in 20 pip ranges although the lack of bounce in either the EUR/USD or the EUR/CHF does argue for an eventual break lower. It just doesn’t look likely to happen during this session.

I don’t think many would have believed on Monday morning that the EUR/USD would be struggling above 1.2500 just a few days later but that’s where it is. China is supposed to be protecting a large barrier at 1.2500 in the EUR/USD and there is similar protection rumoured in EUR/CHF at 1.4000. Then of course there is the SNB.

If these levels break during relatively thin ‘risk-off’ Asian Friday markets, it could again get ugly for the beleagured single currency.

Good luck today and TGIF.

Wanna take on the SNB? They are on the bid at 1.4005 in EUR/CHF for a billion euros…

1.4005 in EUR/CHF. Hot off the presses.

EUR/CHF has given up a quick 30 points, presently down at 1.4010, flirting with supposed 1.4000 barrier option interest. Also talk SNB will have lined up 1.4000 as yet another line in the sand.  Guess we’ll find out fairly soon on that one.

Read some comments from a Swiss bank yesterday saying they believe SNB will slowly phase out their interventions. I remember the bank in question was a huge seller of the cross up at much higher levels. Guess they must still be short and getting shorter.

• AUD/USD: trailing stops above .9040
• USD/JPY: solid offers 93.35 through 93.50. Heavy stops above 93.65 and 94.05
• EUR/CHF: barrier protection ahead of 1.4000; SNB expected to defend same level
• EUR/USD: BIS have been active seller above 1.2725, offers now rumoured to be at 1.2690/00. Plentiful bids towards 1.2600 but stops building just below.

All the other lines have lasted for at least a few days so I’m expecting this one to be no different. If the rallies become as shallow as they did above 1.4320 last week, then we can expect the line to break sooner rather than later.

Barrier protection rumoured ahead of 1.4000 and the SNB were seen buying last night at 1.4035 and we can expect to see more of them as we near the big round number. “TB triple A C” my son would say; to be avoided at all costs! imho

Most of us are a bit perplexed by the BIS action over the last two trading sessions, selling into EUR/USD rallies at such low levels. They obviously have a transaction to do for one of the other central banks and it looks like its a sizeable one. EUR/CHF at 1.4000 and EUR/AUD at 1.4050 are other important support levels to watch today. Cable again tried to retake 1.5000 during the London session but has fallen straight back down again and is looking ripe for another dive.

Good luck today.

Says the finance ministry.

EUR/USD remains capped at 1.2750 but bids are limited as risk appetites improve along with rebounding equities. The S&P is up 0.7% after falling about 1.3% prior to the cash-market open.

EUR/CHF is contributing to the bid in EUR/USD after the SNB gave it a lift. We trade now at 1.4110, up about 75 pips in the last few hours.

Looks like the SNB is backing up deeds with words, as EUR/CHF is boosted to 1.4100 from the 1.4035  not long ago. Resistance lies at 1.4120.

Has come in at +14 in Q2 versus forecast of -1.

EUR/CHF trading lower again overnight as euro comes under pressure and risk aversion climbs.  Presently at 1.4132, down from a North American close Monday up around 1.4190.

The leaders of the EU finally seem to be getting serious and are trying to show some leadership. The upcoming statement will tell us a lot about their dedication to the single currency. The EUR market is very short and the risk of further short covering rallies is very real. Add into the mix the fact that liquidity is poor and we should be ready for some fireworks. As I said before, prepare for the unexpected because that’s probably what’s going to happen.

• Optimistic that Swiss parliament will approve tax deal with U.S over UBS
• There is no plan B if Swiss parliament rejects UBS tax deal

It happens every time that a central bank tries to draw a line in the sand, once the line breaks there is carnage. The break below 1.4320 led to a 300 pip wipe-out in EUR/CHF, normally a months range. Another pair to leave well alone now.

Swiss overnight interest rates have gone negative. It now costs you 7 bp to be long Swiss francs a day, in addition to what it costs you to fund a short EUR position.

Short-covering would be the natural result…

Traders blame selling from short-term focused funds for capping the EUR/USD rally after it reached the 1.2770 area.

A resumption in the slide in EUR/CHF helped cool the rally as the Swiss National Bank’s lines in the sand become shallower and shallower.

Expect 1.4000 barriers to become a target before long.

EUR/USD trades now at 1.2743.

SNB said to be on the bid at 1.4140, good for 700 mln euros.

And I know you’re out there.  Little nugget for ya.

A Swiss private bank out of Zurich is continuing to pressure the cross and that’s why you’re not seeing any appreciable bounce from 1.4210/15 area where SNB is said to be lined up. Seems battle is joined.  This particular bank can be pretty aggressive/lumpy when it wants to be.

Reports now SNB on the bid at 1.4210 after the cross fell away sharply the central bank abandoning their defence of 1.4320/25. We’re presently at 1.4230 having been as low as 1.4214.

Has come in at +0.9% m/m, +1.4% y/y, compared to median  forecasts of +0.7%,  +1.3%  respectively.

EUR/CHF sits  at 1.4325. Who would have thunk it?

EUR/CHF continues to see very steady trade amid much talk of what the SNB is doing.

Latest has the central bank  sitting on the bid at 1.4325, good for 9 yards (yard equals a billion)

Upwards of EUR 5 bln has been sold to the SNB today around the 1.4325 level, traders say. They are taking on all sellers at this point, but many question whether they have ability absorb the continued sales.

On US investment bank is rumored to have sold EUR 3.5 bln to the SNB today alone.

• USD/JPY: barrier protection ahead of 95.00
• EUR/USD: stops below 1.3150; stops above 1.3225
• EUR/GBP: still stuck between buy orders at .8600 and sell orders at .8720- stops both sides on breaks
• EUR/CHF: SNB still supporting above 1.4300
• AUD/USD: heavy interest presumed either side of .9130/.9350 range, stops both sides on breaks