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Weekly Sight Deposits and Speculative Positions: SNB Intervenes, Speculators Short CHF again

Headlines Week January 09, 2017

Who has read Milton Friedman knows that the Trump reflation trade is now showing its positive side. US wages are rising by 2.5%, while inflation is still relatively low. According to Friedman, inflation will increase only later.

This implies that speculators are long the dollar and short the Swiss franc and the euro during the weak inflation period.

The last ECB meeting showed that the ECB might be dovish for a longer period than the SNB. Consumer price inflation will decide who is more dovish. Ultimately inflation will depend on the two key parameters wages and rents.

Rents will rise first in Switzerland, while the Euro zone has downwards pressures in the Southern countries. Wage pressures are weak in both. Wages are increasing more strongly only in Germany and Eastern European countries.

FX This Week’s Data:

EUR/CHF is at the “in-official minimum band” of 1.0680 – 1.07.




Euro/Swiss Franc FX Cross Rate, January 09

(see more posts on EUR/CHF, )
Euro/Swiss Franc FX Cross Rate, January 09

Source: - Click to enlarge

SNB sight deposits

An increase in SNB sight deposits means that the central bank has intervened.

This week’s data:

SNB intervenes for 0.7 bn CHF to keep the euro over 1.07.

Change in SNB Sight Deposits

(see more posts on SNB Sight Deposits, )

Source: SNB - Click to enlarge


Speculative Positions

Speculators were net short CHF in January 2015, shortly before the end of the peg, with 26.4K contracts. Then again in December 2015, when they expected a Fed rate hike, with 25.5K contracts.

The biggest short CHF, however, happened in June 2007, when speculators were net short 80K contracts. Shortly after, the U.S. subprime crisis started. The carry trade against CHF collapsed.

The reverse carry trade in form of the Long CHF started and lasted - without some interruptions - until the peg introduction in September 2011.

In mid 2011, the long CHF trade became a proper carry trade - and not a reverse carry trade anymore - because investors thought that the SNB would hike rates earlier than the Fed.

This week’s data:

Speculators are net short CHF with 13K contracts against USD, 3K more than last week. This is still far from the post financial crisis records of 26 K contracts. We should wait for another Fed rate hike, to reach these levels again.

Speculative Positions

Choose Swiss Franc for CHF Commitment of Traders

source Oanda



Date of data (+ link to source) avg. EUR/CHF during period avg. EUR/USD during period Events Net Speculative CFTC Position CHF against USD Delta sight deposits if >0 then SNB intervention Total Sight Deposits Sight Deposits @SNB from Swiss banks “Other Sight Deposits” @SNB (other than Swiss banks)
06 January 1.0708 1.0499 Good U.S. jobs report. -13439X125K +0.7 bn. per week
529.7 bn.
467.6 bn.
62.1 bn.
30 December 1.0728 1.0467 -10091X125K +0.7 bn. per week
529.0 bn.
466.3 bn.
62.7 bn.
23 December 1.0704 1.0421 Again interventions at 1.07. +7110X125K +0.5 bn. per week
528.3 bn.
463.6 bn.
64.7 bn.
16 December 1.0747 1.0533 Slight SNB interventions at the line of defense of 1.07 EUR/CHF. -25288X125K +0.6 bn. per week 527.9 bn. 457.3 bn. 70.6 bn.
09 December 1.0807 1.0683 ECB continues QE for longer. -25397X125K -0.2 bn. per week 527.3 bn. 454.8 bn. 72.5 bn.
02 December 1.0775 1.0638 -24334X125K -0.1 bn. per week
527.5 bn.
69.9 bn.
25 November 1.0736 1.0581 CHF inflation hedge again. N/A +2.9 bn. per week
527.6 bn.
463.0 bn.
64.6 bn.
18 November 1.0711 1.0656 Investors hedge against Trump’s reflation with CHF. -22194X125K +4.8 bn. per week
524.7 bn.
458.4 bn.
66.3 bn.
11 November 1.0751 1.0921 Donald Trump new U.S. president, reflation trade.
-19970X125K +1.4 bn. per week
519.9 bn.
449.9 bn.
70.0 bn.

For the full background of sight deposits and speculative positions see

SNB Sight Deposits and CHF Speculative Positions

George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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