EUR/CHF: One Year of Free Market (07/2010-07/2011): January 2011

Fears of an escalation of the troubles in Egypt and a possible spread throughout the region have led to some risk aversion in early interbank trade. EUR/JPY is trading at 111.40 after closing at 111.75 on Friday night, USD/JPY is trading just below 82.00, and EUR/CHF is trading around 1.2800.

To all of our readers who may be affected by any of the troubles, good luck.

I had an inkling this thing might get ugly, but it has really hit the fan…

Emerging markets are getting hammered as risk aversion rises. Commodity currencies could be the next shoe to drop…

Oil is up nearly $4, gold is $35 dollars off its lows for the day and The S&P is weaker by 1.5% as Egypt spins out of control.

Traders report talk of SNB bids around the 0.9400 level in USD/CHF if we get there….

If they get any USD/CHF, I would not be surprised to hear of them selling EUR/USD on rallies, to leg out of some of their massive EUR/CHF long position…

Looks like risk aversion is the play of the day as oil jumps and Treasury yields drop…Fears of a Suez Canal closure are the driving theme at the moment.

EUR/CHF is down below 1.2900 at writing.

CHF a bit firmer at 1.2910.

…but it  finally dawned on me where the CHF strength of recent days is coming from.

Having moved reflexively for so many months in opposition to the euro as European sovereign debt has dominated the headlines, it is finding a fresh catalyst from a rapidly morphing democracy push on the Middle East and North Africa, I think.

The Tunisian revolution got the ball rolling while riots in Egypt are the largest in a generation.

The CHF tends to be the safe-haven of choice for the elites, and elites across the Middle East are likely moving what they can into the safest possible harbors in case they are forced to flee their perches.

EUR/CHF is at 1.2912 at the moment, up from 1.2875 earlier in the day.

I may not be the brightest bunny in the warren but I get there eventually…

USD/CHF down at .9565 from early .9590.  Talk of stops below .9560.

EUR/CHF down at 1.2990 from early 1.3040.  Talk of stops gathered 1.2970/75 area. I was earlier told there is a rather lumpy 1.3000 option expiry in EUR/CHF today. How exciting………or maybe not 

EUR/CHF has fallen back to 1.2850 (where SNB bids were rumored earlier) as Greece says there is not considering any form of debt restructuring. USD/CHF is being pummeled as well, sliding to 0.9525 in very short order.

I’d be very reluctant to buy euros while the franc is strengthening so dramatically…CHF, of late, has risen as an alternative to the euro, not in tandem.

Traders report talk that the SNB is expected to be a buyer of EUR/CHF should we dip to the 1.2850 area.

There has been a clear ramp-up in the level of concern from CHF authorities in recent days, both inside the government and the central bank.

To me, it looks as though they are trying to take advantage of a shift in market sentiment versus the euro to drive home a higher EUR/CHF cross, essentially free-riding on something over which they have no control. They can then say to the market “Look, our jawboning worked…”

As the old song goes” “when you ain’t got nothin’, you got nothin’ to lose…”

Hello, hello, stand by your beds!!    EUR/CHF rattling higher, presently up at 1.2970.

The two big bear movers are both looking well as they have established bases for the moment for a potential continuation upwards.

EUR/AUD as Sean mentioned yesterday has a pretty good risk/reward being long as the key support line around 1.3330 is not far away. EUR/CHF had a solid move overnight with the component moves.

Should we see USD/CHF bought in line with a continuation beware large sell orders at 0.9750-75

Firstly there was this Morgan Stanley recommendation on Friday to sell EUR/USD and now Reuters are saying that many of the overly ripe shorts were covered in the mad rush between Wednesday and Friday. I’m hearing something different but it’s a very big market. Hourly support/resistance levels are at 1.3315/1.3405 and a break of either level will set up the next short-term trend.

The sharp moves higher which we saw start on Wednesday last week are being consolidated in typical Monday morning action. The danger would still seem to be for some more short-covering and the short-term charts are showing no signs of any topping formation. On the crosses, EUR/CHF, EUR/JPY and EUR/GBP have all undone their ‘oversold’ readings on most medium-term momentum indicators but EUR/AUD has posted a double-bottom and looks technically bullish.

Large US custodial said to have been aggressive buyer of the EUR/CHF cross this morning. The cross is presently up at 1.2925.

USD/CHF up at .9647 from around .9635 when I arrived.  Don’t know whether they’re buying the EUR/CHF cross as well. That’s rallied strongly, presently at 1.2915 from early 1.2860.

The AUD and the CHF have been the big ‘bubbles’ if you like and the market has sold the EUR against these two in particular with gay abandon. Now both EUR/AUD (a double bottom) and EUR/CHF (an imperfect inverted H&S) are threatening to post important reversal patterns. The levels to watch are 1.3325 in the EUR/AUD and 1.2725 in the EUR/CHF and as long as the market stays above these levels then the prospects for further short-covering in the EUR remain high.

Jamie mentioned earlier that some reversal of long CHF positions pushed USD/CHF to 0.9784 and the EUR/CHF just shy of 1.2670; the base in the low 1.24s in the last three weeks is starting to suggest it may soon be the time to look for a more impressive reversal after the heavy selling from early November

Talk in the market that there is interest to sell EUR/USD lined up for the 13:15 GMT fix.

Also just told interest to sell EUR/CHF as well.

UPDATE:  EUR/USD is indeed giving ground, now back at 1.2955.  Nothing like a bit of front running.

USD/CHF up at .9700 from around .9685 when I arrived.  Sources report real money buying this morning.

EUR/CHF up marginally at 1.2545 from early 1.2530. Talk of stops gathering around 1.2580.

Amid talk of macro funds buying aggessively this morning.  We’re at .9430 from around .9370 when I arrived.  Meanwhile EUR/CHF is up at 1.2585 from around 1.2505.