EUR/CHF, Market betting on Floor Hike, December 2011

I bought EUR/CHF shortly after the 1.20 peg was introduced and have held it ever since. My only regret has not been trading the range more aggressively.

At this point everyone has an opinion of the SNB so I won’t try to convince the bears. Personally, I see no signs of a lack of SNB commitment, the public supports the peg and the government supports the peg.

With EUR/CHF at 1.215, we are near the bottom of the range so it’s a great time to get long. The downside is a stop at 1.20 and the upside could be 1.30 or higher. An alternative is long USD/CHF, which mitigates some of the black swan risk in Europe.

#2: a) buyEUR/CHF at 1.2157 and hold on b) buy USD/CHF at 0.9375 and hold on until 1.12/1.15.

Goldman’s Jim O’Neill tells Dow Jones that he sees the SNB pushing the peg up to 1.30 or 1.35.

Gerry got there first!

But these are less than traditional times, given the SNB’s three-month old peg to the euro.

The franc has had a strong morning, partially as a result of the death of North Korean leader Kim and partially on follow-through on Thursday’s failure of the SNB to raise the peg as so many specs had anticipated.

1.2125/30 is critical support for EUR/CHF. That is the SNB’s line in the sand, a trip wire ahead of 1.20. They have been buyers on dips to 1.2125 on the last several tests of that level. Large stops are seen in the 1.2110/15 area.

Presently at 1.2208.

200 DMA is at 1.2194.   Could be some sell stops parked just below there, although I have no confirmation of such.

EUR/CHF touched below the late-November low of 1.2222. The longs will return to this pair once we see some stability but this is a key level of support. So far, it’s only given way by 1 pip but keep an eye out for a stronger break because it could signal a move as low as 1.2130.

Unsubstantiated talk that the SNB was on the bid near 1.2220 in order to slow the fall last night, after the already-long market was left disappointed by the failure to lower the CHF cap. Regardless of whether the SNB is bidding near here or not, they left us in no doubt that they will do whatever is necessary to defend 1.2000 if/when we get there again.

Some longs are packing it in with the pair lurching to 1.2225 from 1.2260. No news.

I’m expecting the SNB to raise the EUR/CHF ‘base’ to 1.25 later today, so that being the case surely I should be buying EUR/CHF now. I suppose so, but the risk-reward isn’t attractive; the market is long ahead of the decision so I cannot see a big rally happening and if the SNB sit on their hands, then we will see a sharp 200 pip sell-off imho.

Nothing has moved at all in Asia but EUR/CHF has managed to edge 20 pips higher ahead of the European open. Sell orders noted 1.2425/50 in particular and if I were long, I’d also sell at that level and forget the possible 75 pips extra.

The big Swiss banks usually know exactly what’s going on in their home currency and reports from the options market has them as heavy sellers of EUR/CHF Gamma in recent sessions. That means they don’t see a big rise in spot volatility after the SNB which I interpret as a play on a 1.25 ‘peg’.

The market is long, so if there’s no peg adjustment, that would mean a big sell-off in my view and a big rise in volatility. A move to 1.30 would also lead to large spot volatility so my conclusion is that the big Swiss players expect a new EUR/CHF base later tonight at 1.2500.

• USD/JPY: Jamie mentioned reported stops above 78.30
• USD/JPY: Heavy corporate sell orders reported at very regular intervals from 78.25 towards 80.00
• EUR/USD: Large barrier at 1.2900 with smaller barriers at 1.2925
• EUR/USD: Trailing stops above 1.3015; sell orders building 1.3060/80
• AUD/USD: Plentiful solid bids .9800/25
• EUR/CHF: Sell orders at regular intervals 1.2400/50; stops building on downside below 1.2300, getting heavy below 1.2225

Lot of speculation doing the rounds on whether the SNB will raise the EUR/CHF peg tomorrow

Today’s poor  ZEW sentiment number was a result of exporters feeling the squeeze of a strong Swiss Franc. Also feeling the squeeze earlier were a few longs caught out by the small spike lower to 1.2300 earlier . There’s  tech support  down at 1.2300 and 1.2270/75,  with sell  stops  just under 1.2300 and 1.2250 . Resistance  is at  1.2370/80

There have also been  reports that  a swiss name has been selling euro-swiss gamma this morning ahead of the SNB meeting tomorrow morning.

Either way there is a likelihood of some more strong  comments from the SNB regarding  an overvalued franc if the peg isn’t raised;  which may satisfy some of the EUR/CHF longs out there in the interim.

EUR/CHF’s at 1.2334

There seems to be almost universal acceptance that the SNB will raise their ‘line in the sand’ to 1.2500 tomorrow. The market is long in anticipation and the SNB has put itself in an uncomfortable position; if it raises the base, it gives speculators a handy Christmas bonus, whereas if it doesn’t, it risks seeing a sharp sell-off by disappointed longs.

• Plentiful sell orders are noted above 1.2400
• Trailing stops noted at regular intervals on the downside, getting particularly heavy below 1.2225
• Bids expected to start at 1.2125 from SNB, BIS etc but expect more heavy stops below there

There has been a great deal speculation that the SNB will raise the cap on the CHF to 1.25 level against the euro or perhaps even 1.30 this week.

That speculation has taken EUR/CHF as high as 1.2445 in recent sessions but the inability to trigger a barrier of at 1.2450 saw the EUR retrench a fair bit in the last two trading days as the EU summit proved a disappointment at the end of last week.

CHF shorts had built to significant levels in advance of the quarterly SNB policy meeting on Thursday. Given that there is no sign of a sustainable euro zone solution in the near-term, it would be folly, in my opinion, for the SNB to ramp up the peg. They would be better served to adopt negative interest rates without changing the peg rather than putting an artificial target for the market to shoot for via a 1.25 or 1.30 peg.

The market is already on board, expecting a move of some sort to weaken the franc. Heaven help the SNB if they fail to deliver.

USD/CHF chalked up a high of 0.9303 earlier and there’s plenty of talk doing the rounds about SNB’s decision  on Thursday as to whether the EUR/CHF peg is raised or not.

Exporters continue to call for a move  up to 1.2500 or 1.3000 as concerns of a pending mild recession and deflation worry business groups.

Latest  sentiment apparently is that the SNB will leave rates  and the peg  unchanged at the Dec 15 meeting , with the view that  a couple of negative quarters may not necessarily fire the SNB into further action., and that the Swiss franc is only slightly overvalued at current levels .

EUR/CHF sits around 1.2328 with USD /CHF at 0.9300

There is a strong expectation in the market that the SNB will raise it’s EUR/CHF peg on Thursday. The market is already positioned accordingly ie short of CHF, so we can expect volatility to ramp up in the CHF over the next few days.

• USD/JPY: Corporate sell orders now starting at 78.00
• EUR/CHF: Stop-loss sell orders below 1.2300

Many orders get cancelled over the weekend and will usually be reinstated during the day, so order information is generally sketchy on a Monday.

• Very large demand reported for GBP/USD at the London fix (so much for the ‘expert’ interbank analysis from yesterday!)
• EUR/CHF: Option dealers report ongoing demand for 1w and 2w 1.2500 calls

Information on the order front is a bit slow this morning, with many orders being cancelled over the long weekend.

• EUR/CHF: Heavy stop-loss sell orders reported below 1.2115 and 1.2100
• Cable: Bids reported 1.5460/70
• NZD/USD: Solid sell orders near .7925 (100 pips above present levels)

I bought EUR/CHF shortly after the 1.20 peg was introduced and have held it ever since. My only regret has not been trading the range more aggressively.

At this point everyone has an opinion of the SNB so I won’t try to convince the bears. Personally, I see no signs of a lack of SNB commitment, the public supports the peg and the government supports the peg.

With EUR/CHF at 1.215, we are near the bottom of the range so it’s a great time to get long. The downside is a stop at 1.20 and the upside could be 1.30 or higher. An alternative is long USD/CHF, which mitigates some of the black swan risk in Europe.

#2: a) buyEUR/CHF at 1.2157 and hold on b) buy USD/CHF at 0.9375 and hold on until 1.12/1.15.

Goldman’s Jim O’Neill tells Dow Jones that he sees the SNB pushing the peg up to 1.30 or 1.35.

Gerry got there first!

But these are less than traditional times, given the SNB’s three-month old peg to the euro.

The franc has had a strong morning, partially as a result of the death of North Korean leader Kim and partially on follow-through on Thursday’s failure of the SNB to raise the peg as so many specs had anticipated.

1.2125/30 is critical support for EUR/CHF. That is the SNB’s line in the sand, a trip wire ahead of 1.20. They have been buyers on dips to 1.2125 on the last several tests of that level. Large stops are seen in the 1.2110/15 area.

Presently at 1.2208.

200 DMA is at 1.2194.   Could be some sell stops parked just below there, although I have no confirmation of such.

EUR/CHF touched below the late-November low of 1.2222. The longs will return to this pair once we see some stability but this is a key level of support. So far, it’s only given way by 1 pip but keep an eye out for a stronger break because it could signal a move as low as 1.2130.

Unsubstantiated talk that the SNB was on the bid near 1.2220 in order to slow the fall last night, after the already-long market was left disappointed by the failure to lower the CHF cap. Regardless of whether the SNB is bidding near here or not, they left us in no doubt that they will do whatever is necessary to defend 1.2000 if/when we get there again.

Some longs are packing it in with the pair lurching to 1.2225 from 1.2260. No news.

I’m expecting the SNB to raise the EUR/CHF ‘base’ to 1.25 later today, so that being the case surely I should be buying EUR/CHF now. I suppose so, but the risk-reward isn’t attractive; the market is long ahead of the decision so I cannot see a big rally happening and if the SNB sit on their hands, then we will see a sharp 200 pip sell-off imho.

Nothing has moved at all in Asia but EUR/CHF has managed to edge 20 pips higher ahead of the European open. Sell orders noted 1.2425/50 in particular and if I were long, I’d also sell at that level and forget the possible 75 pips extra.

The big Swiss banks usually know exactly what’s going on in their home currency and reports from the options market has them as heavy sellers of EUR/CHF Gamma in recent sessions. That means they don’t see a big rise in spot volatility after the SNB which I interpret as a play on a 1.25 ‘peg’.

The market is long, so if there’s no peg adjustment, that would mean a big sell-off in my view and a big rise in volatility. A move to 1.30 would also lead to large spot volatility so my conclusion is that the big Swiss players expect a new EUR/CHF base later tonight at 1.2500.

EUR/CHF is in retreat this morning after running into option-related sales ahead of 1.2450 barriers.

Every man and his dog expects the Swiss authorities to raise the cap on the franc to the 1.25 or even 1.30 area later this month and the market is quite short of francs as a result.

We’re getting a pretty nasty shakeout as weak longs run for the sidelines on today’s dip.

Support on the near-term charts is pretty modest until the 1.2325/30 area. Could get ugly if the market suddenly gets a case of cold feet.

Again slim pickings i’m afraid…

EUR/USD- Buy stops up at 1.3450/60, Bids 1. 3330/40, sell stops down through 1.3330 and “decent ” bids 1.3300/10

EUR/GBP- Buy stops  above 0.8620, tech support 0.8560/65

USD/JPY- Bids from 77.65 down to 77.50 and scattered down to 77.00 . Some stops mixed in just under 77.50. Offers from  77.80 up to 78.00. Buy stops above through 78.30 and 78.50

AUD/USD- tech resistance 1.0299 (100 day MA),  1.0336 (61.8 % of 1.0753 to 0.9964), Buy stops above 1.0340.Tech support 1.0235, Bids at 1.0200/05.

EUR/CHF- Option barrier 1.2450

EUR/JPY- Bids 103.90/00, larger at 103.65, possibly stops below. Offers 104.50/60 and larger at 104.90/00, likely stops above.

GBP/USD Offers 1.5660/65, Tech resistance above at  1.5680/85, tech support 1.5590/00

• Still looking at the possiblility of negative interest rates to fight the Swiss Franc appreciation
• Prepared for possible events such as another flight into the Swiss as a safe haven, and have developed scenarios to deal  with it.

EUR/CHF spikes up to 1.2442 before easing off again to 1.2420.

NB:There’s talk of an option barrier by the way, sitting up at 1.2450

The BIS were buying EUR/CHF overnight and the noise in the market is getting louder that the SNB will raise the EUR/CHF peg to 1.25 or possibly even 1.30. I wonder do they know already that the speculative world is short CHF (especially against the AUD) in anticipation of such a move. The poor financiers need a Christmas bonus, so hurry up Santa-SNB and deliver your pressy.

Which is why a move, if it comes to raise the floor beneath EUR/CHF, will be much less impactful than the move to put in the 1.20 floor back in early September.

The market is now good and short the Swiss franc in anticipation of a move from the SNB. The prospect of negative short-term interest rates was floated last week while today’s negative CPI figures certainly cements the case for further action from a fundamental basis.The BIS was a rumored buyer just below 1.2400 this morning, we heard from market sources, setting the stage for the pop as high as 1.2425/30 a short while ago.

The trouble for Switzerland is that there is no element of surprise this time around. They won’t get a 10% slide in the franc in a day like they did in September. You’ll have folks selling to EUR/CHF strength, especially if the raise the CHF cap only to 1.25, rather than 1.30 as the bulls EUR/CHF would like.

We’ve traded within 30 pip or so of the September highs; expect options-related buying if 1.2500 is overcome in the near-term. But expect more two-way traffic this time around than in September.

On market talk that the BIS  had been reportedly buying EUR/CHF on behalf of the Swiss National Bank

Swiss secrecy is alive and well….

That will bolster the case for those anticipating a higher CHF floor when the SNB meets in mid-December.

EUR/CHF now at 1.2395.

Weaker than Reuters’ median forecasts +0.1%, -0.3% respectively.

Deflationary pressures picking up. Who would have thunk it?  Well, me for one.

EUR/CHF up at 1.2390 from 1.2345 when I parked my bum. Been as high as 1.2405.

CitiTechs made a big switch into risk trades overnight. The information that these guys get is usually very good so it’s worthwhile paying attention to what they do, especially when they are getting it right as they have been doing recently.

• They’ve cut their short EUR/USD position
• They’ve turned their long USD/JPY position into a long EUR/JPY trade
• They remain long EUR/CHF
• They’ve gone long AUD/USD

That certainly is a strong view they have there. I’m guessing that their reasoning is that the market is still overly short EUR and with the most dire prognoses for the EUR not coming true so far, we may see a big short-squeeze pre-Christmas.

Talk of some reasonable bids now  down at 1.2370 and the Asian lows around 1.2345.  Below here is tech suppport at  the 14 and 50 day MA currently coming in at 1.2332 and 1.2298

Comments over the weekend from UBS’s chief economist forecasting a SNB peg hike to 1.25 and even 1.30 over the next few months  appears to be doing the trick in the short term. with 1.2434/45  nearby tech resistance.

We’ve been up to  1.2400 this morning with focus now on the Swiss November  CPI release tomorrow following the outcome of the Merkel/Sarkozy lunch.

EUR/CHF’s at 1.2383

Sounds eminently sensible to me

Sees 2011 growth at 1.7% from previous 2%

Sees 2012 growth at 0.4% from previous 0.8%

Dow Jones reporting.

EUR/CHF trades at session high 1.2345.

A story/rumour did the rounds just after the European close that the Swiss government is considering adopting a negative interest rate policy. This rumour was followed by the weekly appearance of the ‘raising peg to 1.25′ rumour. EUR/CHF galloped 1% higher, almost touching 1.2400, but it has now settled back mid-range.

No sign of any such activity in today’s session, with absolutely nothing happening so far.

• Considering additional measures to support fight against franc appreciation including negative interest rates
• The most effective tools remain in the hands of the SNB, the government said.

EUR/CHF jumped to 1.2340 from 1.2260 on the comments.

Talking on Swiss TV.

Better get that EUR/CHF peg raised again then pumpkin 

EUR/CHF trades sedately at 1.2270.