EUR/CHF: A Year of Free Market, June 2010

EUR/CHF up at 1.3260 from early 1.3210.  Move comes as Hungary official says government plans loan deal with IMF.  Large German name seen buying the cross.

The euro has found some buying support across the board on profit taking. I wouldn’t be surprised to see this continue in Europe having seen such heavy moves. It would be wise to be flexible today.

EUR/USD 1.2211 EUR/CHF 1.3223  EUR/GBP 81.06  EUR/JPY 108.12

Bit of a summary of what we are picking up….

• USD/JPY – buyers ahead of 88.00 and heavy stops below; talk of Kampo buying at 87.50/75
• EUR/USD – mixture of multiple bids from 1.2150 down through 1.2110 with names eg BIS, Asian CBs although also stops mixed in amongst these between 1.2150-30; heavy stops below 1.2100
• Cable – previously mentioned sovreign sell orders 200 points higher 1.5250/85 that aren’t likely to be tested quite yet; bids nearer 1.5000 and likely a few stops below
• EUR/CHF – 1.3100/20 hearing good bids ( note that the 1.3250 heavy bid yesterday worked for a shrp bounce before further selling set in)

…that the high-profile US hedge fund advisory firm that the market pays such attention to opined that the the SNB would tolerate a CHF as strong as 1.30… Shortly there after the SNB announced they were halting their failed intervention strategy and EUR/CHF went into freefall.

We are now about 1 trading day from the 1.300 level at the present pace. Will the SNB show its hand? Inquiring minds want to know.. What do you think?

EUR/CHF 1.3251 change 1.3295.

Excellent flow info from Sean who earlier advised buy orders lying in wait down at 1.3250.

The sell-off continues as SNB stays at home. deflation no longer deemed a problem.

We’re down at 1.3285 from early 1.3330.

Sean mentioned talk of buy orders lined up at 1.3235/50.  Will be interesting to see if they’re enough to soak up the selling pressure.

The freefall continues in EUR/CHF with no end in sight. Daily charts are at seriously oversold levels but that doesn’t mean it won’t fall another 5%.

Nevertheless I hear that there are some very large buy orders between 1.3150/1.3250 which should slow down the drop.

EUR/GBP has made its latest breakout move taking it below key support and bringing levels below .8000 into focus. EUR/CHF continues to plummet and this from the traditionally most stable pair in the market. The AUD and the JPY are pretty much unchanged from yesterday so Asia is likely to also focus on the EUR crosses for some volatility.

Good luck today.

• SNB can be satisfied with results of its monetary policy
• Resistance of Swiss exports to strong franc is pleasing
• SNB will step in to prevent an appreciation of the franc should deflationary dangers reappear

EUR/CHF continues lower, presently at 1.3515 from North American close Friday up around 1.3550.

1.3500 has given was in EUR/CHF, sending the cross to a fresh record low at 1.3492. Thsode low-interest CHF mortgages so popular in central Europe are going to wreck havoc on borrowers ability to repay. Not good for Europeanbanks, which are heaviloy exposed to the region…

EUR/USD trades quietly range-bound, now at 1.2292.

Swiss banks are winning funds as mounting debt in Europe spooks investors.

Meanwhile EUR/CHF trades at session low 1.3560.

There are supposedly option barriers aplenty on the 1.35 handle in EUR/CHF with mention of 1.3530, 1.3520 and 1.3500. These usually only act as magnets for the market so best to get them out of the way before I try again with my ‘base-picking’ ways.

There appears to be a little confusion. Hearing conflicting reports about bid at 1.3585.  Talk now the bid is not SNB but someone protecting a barrier at 1.3575.  Well suffice to say there’s a decent-sized bid at 1.3585.

Talk Swiss National Bank is on the bid in EUR/CHF at 1.3585.  Said to be for around euros 1 bln.

Talk of 1.3550 barrier with stops parked just below there.

The CHF shows no signs of wanting to weaken, EUR/CHF consistently making new lows; EUR/GBP is in a wide .8150/.8400 consolidation range and it would not be unusual to see it trade up and down a few times inside of this; and the AUD gave up some of it’s gain falling back against the JPY and the EUR (thankfully for me).

A possible source of volatility in Asia could be USD/JPY, with 90.00 a likely magnet; bids just above there and heavy stops below.

Good luck today.

1.3650 EUR/CHF barrier taken out tripping stops below. We’ve been to 1.3627, presently at 1.3645.  German name seen prominent seller above 1.3650.

Talk of 1.3650 barrier interest. Explains why we’ve stopped at 1.3651 so far I guess.

No sign yet of any base wanting to form with the hourly charts again making new lows below 1.3665. Dealers say that they expect the SNB to ‘slow-down’ bearish moves if rates fall towards 1.3500.

The bullish sentiment which was emerging yesterday in the wake of the Chinese moves on the Yuan seems to have retreated somewhat. The EUR is lower across the board despite no major bad news emerging; EUR/CHF continues to make new lows, EUR/JPY has given back all of the strong gains made in early Europe plus some, and the EUR/USD is very much back in mid-range territory. The AUD has managed to maintain some of its gains but if risk aversion returns then it will also be pressured.

Good luck today.

I’ve taken a small loss on my EUR/CHF longs as this is obviously not yet the time to be trying to pick a base. Most technical signals remain bearish but I’m still hearing from the market that the ‘clever’ money is booking profits so I’m still looking for some indication of a basing formation before having another go.

The downtrend wrested back control overnight and we now look set to re-test the 1.3730 low from early last week. We can expect to see some stops go off (mine included) if the level breaks.

• Global economy supports swiss economy, export capacity better utilised
• Rise in mortgage loans and movements in real estate prices are risks demanding attention
• SNB to publish information on current fx reserves on website at start of each month

SNB’s deflationary concerns have disapated somewhat, lessening the need to fight swissy strength.  The market has taken the hint and clobbered the EUR/CHF cross. Been as low as 1.3764, presently at 1.3780.

We’ve been talking about this for the last few days and the market is sensing that the big speculative EUR shorts are starting to cover. As I mentioned last week, there was talk in the EUR/CHF market that at least two big players were trying to cover on the 1.37 handle and we also heard yesterday that there are some very big stops in EUR/JPY in the 114.50/115.50 window. Heavy stops are also likely to emerge in EUR/GBP above .8400 and EUR/AUD is approaching important support levels in the low 1.40′s. All of which would suggest that the risk for the EUR in the short-term at least is to the topside.

Further to this post…

The well-known US think tank who hates to see their researched flashed on the web moments after publication has put out a report saying that the SNB is now more open to CHF strength.

EUR/CHF has pulled back to the 1.3975 area after the report.

The EUR/USD is above 1.2200 and more stops are touted above 1.2210. EUR/CHF has managed to break above the Friday night high at 1.3950 and us longs can hold off a bit before booking some profits. EUR/GBP has also maintained its momentum from Friday, now above .8350.

Anyone who bought in on Friday should consider booking partial profits if this 1.3950 resistance holds again. I’m sure it will eventually break but booking smalls and re-loading on dips is never a faulty strategy.

Now that EUR/USD has re-established itself above 1.20, market sentiment towards the single currency has improved significantly. I expect this to manifest itself in some significant moves higher in the EUR crosses. EUR/GBP rallied 100 pips from its Friday lows and whilst I still wouldn’t discount another final push lower, a re-test of the .8400 breakdown level is looming as pivotal. On Friday we saw some new buyers apart from the SNB emerge in EUR/CHF and this will greatly increase the chances of a rally back towards the mid 1.40s. If the hedge funds start covering their shorts then there will be some sharp moves higher.

If market sentiment for the EUR is to improve then it is vital that the crosses start putting in interim bases and start to rally. EUR/CHF as I’ve just mentioned at 1.3750, EUR/AUD will need to hold above the break-up level at 1.4000/50 and EUR/GBP will probably need to hold above .8150/75, where there are rumoured to be some big bids. All of these levels will need to hold in order for the EUR to sustain any sort of recovery. EUR/JPY is the one cross pair which is still showing no definitive sign of wanting to put a base in and we need to see some more market signs over the coming days.

If you are of the opinion that EUR/CHF has fallen too far too fast and you have been looking for a opportunity to ‘pick the bottom’ (in other words if you’re like me) then there might be a possible opportunity emerging. The last place where the SNB was spotted was at 1.3750 and as we know their attempts to put a base in haven’t been overly successful. However I am now hearing that there may be a few other significant buyers coming into the market- hedge funds who’ve been short for a long time and for various reasons are looking to take profit. If this pair turns, watch out.

• EUR/USD: plentiful offers between 1.2145/70; stops above 1.2200, 1.2225 and 1.2250 (heavy)
• AUD/USD: talk last week of real-money sellers .8550/70 but no confirmation as yet that they’re still live
• USD/JPY: stops aplenty above 91.70, 91.95 and 92.10; corporate sell orders starting above 92.50.
• EUR/GBP: bids solid between .8150/75
• EUR/CHF: SNB thought to be on bid around 1.3750 but other bids also emerging.

Yesterday’s news that the SNB sold CHF80 bln in May is being met with derision by most…

EUR/JPY is in a short-term 108.50/110.50 consolidation range and AUD/USD is in a wider .81/.85 one. EUR/CHF continues to make new lows but is susceptible to sharp short-covering rallies and EUR/GBP remains bearish but traders are very wary of potential public debt problems for the UK and this cross is also prone to spikes higher.  There was talk yesterday of heavy stops above 1.2010 in the EUR/USD and as that was the high overnight, I’m sure they will now have been joined by more.

Good luck today.

Sean often counsels readers to avoid markets where intervention is taking place. Wise words from a wise man.

Whether or not the move from 1.3750 to 1.3900 was engineered by the SNB, they have been an active presence for months, giving traders the opportunity to take a pass if they were looking for placid trading waters.

Here we are, only hours removed from the 150 pip jump, trading essentially at the levels where the move began…

1.3746 to 1.3900 in a flash…Prices have already slipped back to 1.3800 as they fight a seemingly futile battle to weaken the franc

Who like to dabble in EUR/CHF. Hearing talk that a major Swiss commercial bank has been seen buying the EUR/CHF cross in recent trade.  Given combination of  SNB and the commercial bank interest, I’m a little surprised cross hasn’t popped back a little higher.  Oh well. We’re presently at 1.3814 from session low 1.3787.

Below 1.3800. We’re presently at 1.3800 having been as low as 1.3787.

Sentiment is very grey this morning. Talk of a constitutional challenge in Germany to the EU/IMF aid package, G20 suggesting that the fiscal expansionary policies must cease, Sovereign debt woes all over the globe- it’s a bad news day and risk-aversion is the only play. There is talk now of big stops in the AUD/USD below .8000 and this level is getting ever closer once again. The EUR has no friends at all in the FX market and is falling against the USD, JPY, GBP and CHF.

For those who missed it overnight, a US based consultant issued a report which was particularly bearish for EUR/CHF. They concluded that the SNB could not continue to intervene in EUR/CHF as they have in recent months which would logically mean that the cross has further to fall.

The SNB was very eager to sell into the big rally off the 1.40 low which would seem to confirm that they were sitting on an uncomfortably big long position.

As Jamie mentioned overnight, a report from a US consultant concluded that the SNB could not hope to continue intervening in EUR/CHF and this helped the pair to fall 60 pips immediately and the slow slide has continued in Asia. There has been no bounce whatsoever. The SNB reaction in trying to sell the cross through the Swiss Banks immediately after the initial big rally off 1.40 gave the game away. It showed that even Central Banks are worried when they are required to take extra large positions. The experience of the BoE in the early 1990′s is still fresh in many memory’s.