EUR/CHF A history of interventions: September 2009

As Jamie said earlier, it’s amazing that an economy half the size of Norway’s can lead the market by the nose and it has now done so for the second successive day. NZD/USD rose almost 2% in two hours which is quite unbelievable and this indicates a market which has gotten it totally wrong. It traded to a high of .7308 but has now settled back at .7280. EUR/USD also took out previous highs, trading to 1.4844 before falling back. USD/CHF also fell sharply below 1.0200 and the cross fell to 1.5115.

Of the majors, USD/JPY and cable  are the only ones thus far not to challenge recent USD lows.

I have written the same headline on a number of occasions in the last few weeks. Intervention by the SNB is still presumed above 1.5100 but the stops are big just below there and again below 1.5000. It is highly unlikley that the pair will move during Asian trade but it’s worth keeping an eye on, just in case the bids don’t eventuate.

The Swiss Government has raised it’s 2009 and 2010 GDP forecasts. The 2009 forecast is now -1.7%, up from previous -2.7%, while 2010 growth is now seen at +0.4% from previous -0.4%.

CPI is seen falling -0.4% in 2009 before rising +0.9% in 2010.

EUR/CHF is steady around 1.5155.

Gerry mentioned this yesterday during the London session, that the SNB are thought to be sitting on the bid at 1.5110 in the cross. This would explain the large number of stops sitting just below the figure. Judging by the lack of bounce exhibited so far, they may be well advised to pull their bid, let the stops get done and then trying forging another base at a lower level.

The talk has  been for weeks now that the market is very long in anticipation of continued buying by the SNB. Stops are said to be quite large below 1.5100 and again below 1.5000. If the interventionist bids don’t appear, watch out for a clean out of these stops in double-quick time.

Thanks to saferanger for heads up. There appear to be rumours that the BIS stepped in buying USD/CHF earlier around 1.0350.

I can’t get confirmation of such, but sounds totally feasible and I would tend to believe the talk.  Especially given that BIS was definately in buying USD/JPY and especially as EUR/CHF is trading below 1.5150, presently at 1.5145.

There are quite a lot of stops building below 1.5120 and again below 1.5100 in EUR/CHF. Dealers often try to take advantage of thin twilight-zone markets to try and trigger such stops. The expectation in the market is that the SNB or BIS will appear on the bid but I have no information at present as to what level they are sitting on.

I’m also hearing of a decent sized sell order in the NZD/USD between .7075/.7100.

Talk continues to swirl that the Swiss National Bank was a prominent buyer of US Treasuries yesterday, setting tongues wagging that they are preparing for intervention. It’s sort of like renting a parking place before you buy a car, but I guess some people do it that way…It raises a few questions though.

Question one: Why dollars and not euros, the currency of their dominant trading partner? Answer. I don’t know. Perhaps they think the dollar is bottoming and are inclined to buy USD/CHF in the near-term and then leg into EUR/CHF by buying EUR/USD at lower levels.

Question two: Could the SNB just be rolling over maturing holdings? Answer: Yep

Bottom line: Could be a tempest in a teapot, but with EUR/CHF around the 1.5150 level where the SNB has acted in the past, traders remain on guard for action.

Big thanks to Lilac for the heads up. There is speculation in the market that the SNB could be about to intervene in USD/CHF and maybe EUR/CHF.

Apparently the SNB has been buying US government bonds yesterday and again today. Whilst this activity could be just regular asset managment operations, the market is taking note of it because the Swiss central bank has done the same just ahead of previous currency interventions.

Maybe much to do about nothing and just coincidence, but certainly worth noting.  Certainly the market is paying attention.

EUR/CHF is up on the day, presently at 1.5175 from an early 1.5155.

Interesting thing to me was the cross didn’t come under any real pressure as stocks slumped yesterday, as one might have expected.

Seems everytime we get to around 1.5150 talk resurfaces of BIS buy interest entering the market. That’ll do it, I guess.

Supports 1.5135 and 1.5110, resistances 1.5200 and 1.5240/45.