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

EUR/CHF sits at 1.2048, some 7 pips easier from when I started out.

Barrier option interest sits at 1.2025 and ofcourse 1.2000.

SNB interim head honcho Jordan speaks later this evening (18:30 GMT) in Zurich.  Might be giving instructions on how to make his favourite alpine muesli for all I know,  but it’s been noted.

They haven’t been having a very good run recently and if I remember correctly, this trade has gone against them from the first moment. They also cut their long EUR/CHF position recently for a loss although I think they are long USD/JPY at present and catching this nice move higher.

At 1.2050 apparently. We’re at 1.2058 at writing.

That’s more like it

Stop-loss sell orders in EUR/CHF below 1.2000 are now said to exceed EUR25 billion and if they go off early on a Monday morning, then there will be carnage. I say the same thing every Friday afternoon; if you’re long, why not square up your position before the weekend and reenter on Monday? I cannot imagine that the market will gap higher over the weekend so you should be able to reenter for the cost of a few spreads but at least have a restful sleep?

Despite barriers and plentiful corporate sell orders, USD/JPY keeps marching higher helped also by some of the cross pairs like EUR/JPY, which has broken and closed above important technical resistance levels. Buying dips in any of these pairs seems like a sensible strategy.

EUR has managed solid gains across most of the major crosses, except the EUR/CHF where the market is already ridiculously long and praying for the SNB to give them a freebie. EUR/GBP took out stops (mine included) above .8410 and EUR/AUD is working through reportedly good-sized offers just below 1.2475.

Good luck today.

There is still plenty of uncertainty surrounding the EZ debt crisis, as can be seen in the press headlines which Gerry posted, but the EUR/USD has ignored this and has opened at 1.3190 in early interbank trade, up 50 pips from its NY close. The AUD has done even better, up at 1.0790 as dealers anticipate a risk-friendly outcome. Elsewhere, USD/JPY continues to motor higher and is consolidating overnight gains just above 79.50, cable is at 1.5860 and EUR/CHF is at 1.2085.

Good luck today.

If EUR/CHF is still hanging around present levels near close of business tonight, perhaps you longs out there might considering closing your position for the weekend? The chances are that it will open at the same level on Monday morning so you can get back in for the cost of a few spreads. If on the other hand, something very EUR-negative were to happen over the weekend, those monstrous stop-loss sell orders below 1.2000 will get triggered, SNB or not, and the slippage is likely to be very painful early on a Monday morning when liquidity is virtually non-existent. Just a thought.

The double top on the daily chart has convinced the CitiTechs team to cut their long position, taking a 300 pip loss. Even though they expect the SNB to be there at 1.2000, the technicals are telling them that it’s headed for 1.1800.

A close above 1.2108 would be a mild positive on the weekly chart but for the first time in a month, the Swiss National Bank will be able to sleep easy over the weekend. Credit Suisse was out with a report today saying they expect the floor to remain in place through 2012 and possibly longer.

Apologies for the lack of coverage this morning but i had commitments and Gerry’s got the day off.

Doesn’t look like  a whole lot’s going on as market waits for headlines.

The marginally weaker Swiss CPI  has had little impact but does seem to  back up SNB’s belief that the cap is necessary and  wouldn’t be surprised to see some comments emerge from the Swiss authorities  if we start heading lower again.

EUR/USD’s looking rather rangey, and have heard from some sources that an ACB may be sitting on the bid under 1.3250 but i can’t confirm this from my usual bank sources.

On the order front i’ll try and knock up an order board shortly, but in the meantime  there’s talk of stops down through 1.3230 with bids infront around 1.3235/40. Offers are up at 1.3290/00 and there are expiries at 1.3300.

Better than median forecast of -22.

As I won’t be here much longer this week,  probably a good time to mention the release of latest Swiss CPI data at 08:15 GMT Friday, expected -0.3% m/m, -0.8% y/y.

Very very important data as the market looks for signs of accelerating deflationary pressures in the Alpine country.

Weaker than expected data should help underpin the EUR/CHF cross, which presently sits at 1.2100.

Reuters reporting.

Throw the bloody kitchen sink at it!!!

EUR/JPY : Offers  100.90/00, with buy stops  on a break , but should be  a bit sticky round there as the 55day MA comes into play around 101.09. Tech support is around 100.35/40. Bids below at 99.95/05 with sell stops  down through 99.85, 99.50 and 99.25

USD/JPY: Semi officials bids towards 76.50, sell stops down through 76.00.  Exporters have offers up at 76.80/00, and now hearing some buy stops placed in between up through 76.85 with more through 77.00.(14 day MA also lies at 76.82)

AUD/JPY: Buy  stops up through  83.00, some Japanese named bids  apparently 82.60/65

Presently 1.2075 from early 1.2060.

Just a reminder SNB’s Jordan to speak 10:45 GMT.

Talk of sell orders clustered 1.2090 through 1.2110.

Given 1.2108 was recent January 25th high,  both Joe and I would expect there to be buy stops through 1.2110 (ain’t got no confirmation of that though, we’re just using our near 60 years of foreign exchange experience. You’d have thought we’d have learnt alot more  Can’t help being slow, I guess)

The SNB announced earlier that foreign currency reserve data will be published tomorrow at 0800 GMT, rather than today. No reason was given A conspiracy theorist might see something there.

Reserves fell to CHF232B from 282B in the two months after the peg was announced but they rebounded to 254B in January. They would go higher in the event of intervention.

Jordan also speaks tomorrow at 1045 GMT.

UBS was out with an interesting report on the weekend noting that the SNB has expanded trading agreements, specifically to Asian banks, to ensure ample market access at all hours in order to defend the peg. They also said the SNB will raise the peg to 1.30 in H2.

Just pushed through  the recent Feb 1 highs of 0.9250, to 0.9260 and a sustained push here can target 0.9339 seen on Jan 25.

Unfortunately EUR/CHF is till under the cosh at the moment with  some reasonable resistance seen up around 1.2085 which  is  keeping the USD suppressed for the moment.

(NB.  SNB Chairman Jordan is speaking tomorrow in Geneva tomorrow, so may see some further rhetoric regarding the swiss peg if the pressure continues to build)

USD/CHF is sitting at 0.9256 with EUR/CHF around 1.2070

EUR/USD is currently trading near 1.3130, having been as low as 1.3076, after closing in NY on Friday at 1.3145. As always on a Monday morning, it’s stop-loss chasing which is the most likely factor to move the market. EUR/CHF is trading near 1.2070, cable at 1.5815, AUD/USD just below 1.0750 and USD/JPY is 76.60.

Good luck today.

Solid bounce to 1.2070 from the 1.2032 lows, mid-week.

No info on the orders today but there appear to be strong offers at 1.2070. It’s easy to imagine those highs holding for the remainder of the day; fast money is very long EUR/CHF and will be selling those positions into the weekend.

If you’re long EUR/CHF, it might be worth considering a square-up before the weekend just in case those stops get smashed on Monday morning. I’m sure you’ll be able to get back in at similar levels on Monday morning?

Another question worth considering, is whether the SNB have credit limits in place to handle that amount of turnover? On a Monday morning? Too risky for me this pair, best avoided, sit back and wait for trading opportunities imho.

Big story in the FT this morning.

Bottom line: The SNB has its work cut out for it, especially if this Greek nonsense isn’t sorted out soon.

At this time yesterday, EUR/CHF fell to the daily low.

Up to 1.2060. It gives the longs (and the SNB) some breathing room.

Yes, of course. For a while.

They’ll absorb lots and lots of selling but you can forget any grand scheme to launch EUR/CHF to 1.3000 or some such nonsense.

I’d expect them to take in several tens of billions of euros at 1.2000 if forced to, but at some point will abandon the peg if they are forced to build reserves beyond some reasonable limit.

I’d expect the intervention to pay diminishing returns. The first round of buying will spark somewhat of a bounce but subsequent will provoke smaller and smaller bounces. Eventually, when we stop bouncing at all, they will pull the plug…

Just one man’s opinion.

Thanks to Alok for this startling piece of information from the retail trading world. Sounds to me like a very big accident waiting to happen.

• EUR/USD: Stops seen below 1.3040 and I’m hearing that momentum funds and CTAs are building their short positions again, adding to existing shorts on bearish breaks
• EUR/GBP: Bids at .8265, sell orders now near .8325
• EUR/JPY: Some stops were triggered earlier this morning below 99.60; momentum funds and CTAs also noted sellers
• EUR/CHF: BE CAREFUL!! Huge stops below 1.2000 just in case SNB is out for coffee!!

Lots of white knuckles out there as the 1.2034 low from the US session gives way by a pip or two.