EUR/CHF, A History, Market Betting on Floor Hike: January 2012

1.2025 barrier supposedly in play while the 1.2000 peg below will act as a magnet if broken.

There is something about the forex mindset that prompts markets to reach out and touch things that are not meant to be touched.

EUR/US fell to 1.3063, triggering a few small stops; larger stops are in the 1.3050/60 area.

The earlier “dead-cat” bounce  to 1.2063 was soon forgotten, and the EUR’s since slipped back again towards  yesterday’s low of 1.2040 to 1.2047.

There’s some large bids sitting below at  1.2030/40 ahead of the barrier and the SNB floor of 1.2000, with large sell stops positioned  for a break of the peg.

Yesterday we looked at some very good reasons to be long USD/CHF and even though the spot price is 50 pips higher, the case for being long has been weakened.

• USD/JPY has broken below 76.50 and the bears are back in control
• EUR/CHF has broken below 1.2050 and a test of 1.2000 looks inevitable

I know as soon as I say that, it’s bound to come back and bite me, but there are some good reasons for thinking that USD/CHF may be close to a good entry level for bulls;

• EUR/USD: Solid technical resistance looming around 1.3250
• USD/JPY: Semi-official bids at 76.50
• EUR/CHF: Again talk of bids at 1.2050 from BIS and/or SNB and of course 1.2000 SNB ‘line-in-the-sand’

Putting all 3 together would seem to suggest that going long USD/CHF somewhere near here makes sense (until some of the above levels get broken)

We’re at 1.2072.

Barriers noted at 1.2050 AND 1.2025.

Weaker than median forecast of -0.05.

EUR/CHF tiny bit firmer at 1.2070.

Yes there are big bids at 1.2050 and yes the SNB has again reiterated its intention to maintain a 1.20 peg in EUR/CHF, but that doesn’t necessarily mean that the monstrous stop-loss sell orders below 1.20 are safe!

Is it possible that on a Monday morning, stops get triggered below 1.20? Is it possible that the full market opens way below 1.20 and causes a big ‘margin call’ event? Is it possible that the SNB don’t have a firm bid at 1.2000, but decide later in the day to drive it back higher? Answer Yes to all.

Sorry if I sound like a Nervous Nellie, but we’ve all seen these things happen before, so be careful!

1.2057 was the low earlier this week, 1.2056 last week.

More heavy turnover reported overnight in EUR/CHF with leveraged speculators still the primary buyers and real money accounts selling rallies. If these reports are accurate, then the stop-loss sell orders below 1.2000 must surely be increasing day by day.

Swiss company Roche  are making a hostile bid of $5.7 bln  for US company Illumina INC, whioch is weakening the swiss franc this morning ..

The move  is being more reflected in the EUR/CHF cross with a jump to 1.2109 just now . USD/CHF is holding steady around 0.9285

On the orders i haven’t heard much so far except the much spoken  barrier at 1.2050 and large bids aherad of it around 1.2060.

I’ll update later when I have more

Just being told “very large bids” in EUR/CHF down to 1.2050 on EBS.

We sit at 1.2060.  Talk of barrier interest at 1.2050.

The short-covering in the EUR failed to affect EUR/CHF and we are not very far away from important support at 1.2050 and vital support at 1.2000. The SNB re-iterated overnight their intent to defend the 1.20 peg (but does that mean they will be on the bid at 1.2000 exactly or will 50/75 pips below be also ok?). Monstrous stops are also reported below 1.2000.

EUR/USD is trading at 1.2860 and EUR/JPY is at 99.00, both 50 pips below their Friday closing levels. Cable is trading at 1.5530, AUD/USD at 1.0460 and EUR/CHF at 1.2070.

Greece remains the key to the medium-term EUR sentiment but Monday morning moves are generally 100% driven by stop-loss orders.

Good luck today.

Dow Jones article.

• EUR/USD: Sovereign name seen selling towards 1.3000; decent-sized option expiry at 1.2950; large expiries at 1.3000
• AUD/USD: Large sell orders near 1.0450; solid bids 1.0350/60
• USD/JPY: Corporate sellers 77.30 and larger near 77.50; stop-loss buy orders above 77.40; bids very solid near 76.50
• EUR/JPY: Sell orders 100.25
• EUR/CHF: Barrier at 1.2050; unconfirmed reports of SNB bids at 1.2050; ‘monstrous’ stops below 1.2000

That’s it from me folks, thanks very much for your company this week and see you on Monday. Have a great weekend.

Monstrous stop-loss sell orders reported below 1.2000. I’m pretty sure the SNB will not be awake late on a Sunday night in Zurich to intervene so it’s possible that there’s a mad stop-loss rush on Monday morning. Be careful.

EUR/CHF plunging to 1.2069, even with Greece poised to strike a deal. Gold is rallying  to a session high as well.

40 pip spike in EUR/CHF, do doubt sending chills down a few backs.

Below 1.21 is a great spot to get long.

Update: My suspicions confirmed… talk of a bid at 1.2150 that was quickly removed.

Despite the liklihood that the SNB will be defending the 1.2000 level in this pair, big real money funds were noted sellers of the cross overnight above 1.2120. It would seem like an obvious thing to do, to wait and sell on stop below 1.2000 if the SNB fail to hold it up, so why don’t these big professional funds do that? I have no idea I must admit but I have also no interest in trying to buy this pair in the hope that the SNB come good; the bearish sentiment is simply too strong.

• EUR/USD: Plentiful selling interest emerged last night at 1.2810 and further large selling interest is reported 1.2840/50 and 1.2870/80; the big bids are being patient at 1.2620/30 although I suspect any dips towards yesterdays lows at 1.2650/60 will be well supported. No news on any bids before then which is quite a big gap!
• AUD/USD: Macro players were noted sellers yesterday at/near 1.0420 as also were an Asian central bank and a Middle East Sovereign. Real money remain the main buyers but no major buying interest seen until near 1.0300.
• USD/JPY: Same old story; semi-official bids at 76.50 and real money as well as corporate offers starting at 77.15
• CHF: Large demand reported overnight for the CHF against a variety of other currencies like USD, EUR and GBP- once again real money buyers dominate.
• EUR/JPY: Sell orders reported at 98.55 and of course the big optionality at/below 97.00

• Exports suffer from franc strength
• 2012 growth seen at 0.5%

My annual income should be $4.8 bln. What it is and what it should be are two very different things…

UPDATE:

• Up to Swiss National Bank to to act on franc
• Hopes for franc easing sooner rather than later
• No new support for Swiss companies planned
• All euro scenarios are being considered
• Euro will survive
• Number of euro countries could drop
• Sees Germany, Netherlands, France in euro zone

• AUD/USD: Solid offers ahead of barrier at 1.0400; stops reportedly above 200-day MA at 1.0408
• EUR/CHF: Large 1.2100 expiries later today should ensure that spot doesn’t move too far away from there
• EUR/USD: Very large bids 1.2620/30
• USD/JPY: Semi-official bids near 76.50; real money and corporate offers 77.15/25
• USD/CAD: Stop-loss sell orders below 1.0125

The early interbank market is testing Friday night’s lows near 1.2625 but hasn’t managed to break below there yet, the range so far this morning being 1.2630/58. The AUD continues to hold up well despite the risk-off environment and is trading just below 1.0300 while elsewhere cable is at 1.5290, EUR/CHF is 1.2070 and USD/JPY 77.00.

Good luck today.

Traders say there are only EUR 100 mln on the bid on the EBS from 1.2087 down to 1.2080.

Looks like SNB does not want to get into a fight today. Can’t blame them.

We’re down near the day’s lows  of 1.2095 , and there’s been a lot of rumblings about the peg this morning apparently eminating from the bond markets.

Talk that SNB is set to raise the peg again to 1.3000 from one corner, with the other rumour that it’s going to be withdrawn!.

Either way there are bids to the tune of 500+ million euro’s plonked on the EBS at 1.2090 ahead of barriers reported at 1.2075 and 1.2050 .

Could be an interesting session with the usual Friday rumour mills in full swing (…….especially as it’s Friday the 13th !)

Heavy stops were triggered below 1.2100 last night but falls were limited to 1.2083, with many players very happy to buy dips ahead of expected SNB action to support the pair above 1.2000. Now that we’ve had a look below 1.2100, I’d expect further losses to test the big 1.2000 level sometime over the next week or so. There had been some expectation that the SNB might start buying as soon as 1.2100 broke, but no sightings have been reported to the best of my knowledge.

The slightly more dovish language used by Mario Draghi in his statement has interbank analysts now looking for two 25bps rate cuts in H1, which would take rates down to 0.5%. This doesn’t come as a major surprise, and looks like a case of ‘sell-the-rumour-buy-the-fact’ with EUR shorts covering aggressively especially against the USD and the GBP.

Guess they popped a barrier there…

No stampede out of the safe-haven Swiss franc today despite the improved tone in EUR/USD.

• Possible double-bottom at 1.2660
• EUR/GBP looks to be challenging recent downtrend
• EUR/AUD reaches what for some was a target level at 1.2325
• EUR/CHF getting close to major supports where SNB intervention will emerge
• Market is very short of EUR across the board
• German Bund auction performed well yesterday

They mean business I tell ya.

EUR/CHF relatively steady at 1.2125, marginally firmer from the 1.2110 I walked into first thing.

Recent reports out of China suggest that growth forecasts for 2012 will be reduced as the European crisis weighs heavily on the export market. Recent manufacturing data out of the US shows that it is starting to concentrate more on home production rather than importing cheap goods from China, and this will also show up in today’s data. We should see some volatility in the AUD around the time of the data.

EUR/CHF will be another source of volatility after the resignation of SNB chief Hildebrand and the market is eying large stops below 1.2100. That said, overnight reports suggest that there was significant buying interest in the 1.2100/20 region overnight and it was not from the SNB, who weren’t sighted.

Good luck today.

Kind surprising the SNB did not put a mega bid at 1.2125 to paint a pretty picture of support on the charts but perhaps they wanted to inflict some pain on the market before restoring order. We’re back to 1.2130 now.

Look for a test of 1.2000 if we can trigger the stops below 1.2100.

Rumors are that Thomas Jordan, another SNB board member will replace Hildebrand.

Effective immediately, after currency trading scandal.

Stops below 1.2125 are being triggered. Large below 1.2100.

No successor has been named.

With the SNB leaderless, specs are attacking, driving the franc higher to see if the SNB has its defenses in place.

Here is the statement from the SNB.

EUR/USD slipped as low as 1.2725 on selling at the 13:15 ECB fixing but prices quickly rebounded was the fixing passed. BIS buying has been seen in recent trade.

EUR/CHF bounced from the SNB’s perceived line in the sand. Expect dip buyers in abundance down here but heavy stop -loss sell orders on a break of the 1.2125 area., especially below 1.2100.

EUR/USD sellers are seen in the 1.2790/1.2810 area but trailing stops are clustered around 1.2820/25.

There has been a slow and gradual drift lower in EUR/CHF and we are close to testing the 1.2125 level, where the SNB are rumoured to be buying (just as they did a few months ago). Stop-loss sell orders are reported just below there and again below 1.2100.

• Unconfirmed reports that SNB is buying at 1.2125
• Heavy stop-loss sell orders below 1.2100

If this bearish EUR sentiment persists, we will probably see another test of these support levels in coming days.

Bloomberg reporting.

Party Chairman Levrat opined “The euro limit of 1.20 must be increased” adding “It’s a question of credibility”

Oh-eh missus….

Well fairly important anyways.

08:15 GMT:   Swiss CPI for December expected -0.1% m/m, -0.6% y/y

Weaker than expected data, indicating creeping deflationary pressures, should lend EUR/CHF some underpinning. The cross presently sits around session high 1.2190.

• SNB chief Hildebrand will hold what should be an interesting press conference later today
• Talk in market that SNB is bidding at 1.2125 in EUR/CHF

Did you see the Swiss manufacturing data this morning? 50.7 in December after 44.8 in November.

Hopes for a hike in the peg to 1.25 or 1.30 just left town…

Heavy bids are rumored (from the SNB and friends) at 1.2125. Heavier stops will be perched not far below, probably heaviest below 1.2100.

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)