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George Dorgan

George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com 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.

Articles by George Dorgan

FX Weekly Review, April 17 – 22: Dollar Technicals Trying to Turn, but…

2 days ago

Swiss Franc Currency Index
While the dollar index had another bad week with a 0.75% less, the Swiss Franc currency index could accumulate the corresponding gains. Main reason is that the EUR/CHF rose over 1.07.
The euro is still the main component of the Swiss Franc index, but the dollar is recovering thanks to rising pharmacy exports to the U.S.

Trade-weighted index Swiss Franc, April 22(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge

Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar

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FX Weekly Review, April 10-14: Swiss Franc loses against the Yen, but wins against Dollar

9 days ago

Swiss Franc Currency Index
Last week the Swiss Franc improved against both euro and dollar, but – compared to its safe-haven counterpart Japanese Yen – it had a bad performance. We expect strong SNB interventions, that reflect the demand for CHF safe-haven.

Trade-weighted index Swiss Franc, April 14(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab

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Swiss Producer and Import Price Index in March 2017: 0.1 percent rise

12 days ago

The Producer Price Index (PPI) or officially named "Producer and Import Price Index" describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. See more in Is the Swiss Franc overvalued?
Producer and Import Price Index in March 2017
From the data release of Swiss Statistics:
Neuchâtel, 13.04.2017 (FSO) – The Producer and Import Price Index rose in March 2017

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Weekly SNB Interventions and Speculative Positions: Back to 2.4 bn Intervention per Week

15 days ago

Headlines Week April 10, 2017
We were arguing in the previous months, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
The tendency of point 3 had been interrupted when the ECB appeared to be less dovish.
FX Last Week:
Low Eurozone inflation let the euro fall again versus both dollar and Swiss franc. The EUR/CHF ended at 1.0680 for the week.
At the End of march, Eurozone inflation data was released. Core inflation has even fallen from 0.9 to 0.7%. Therefore a ECB rate hike will not come soon.
This implies that the

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Weekly Speculative Positions (April 4 Data): Reduction in CHF Net Shorts

15 days ago

Swiss Franc
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
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.
CHF Speculative Positions
Last data as of

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FX Weekly Review, April 03-08: Dollar Recovery Can Continue, 10-year Yield Set to Rise

15 days ago

Swiss Franc Currency Index
In the last week, the Swiss Franc index lost a little territory as compared to the dollar index.
Finally it ended, where it started one month ago.

Trade-weighted index Swiss Franc, April 08(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for exchanges).

Contrary to popular believe, the CHF

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Swiss Retail Sales, February: +0.5 percent Nominal and +0.6 percent Real

22 days ago

The Used Goods Question
Retail sales in several countries like Germany, Japan and Switzerland continue to fall or they remain steady for years.
In the United States they have strongly risen recently. We should remind readers, that used goods sold via Ebay or similar, are not contained in this statistics. Still they create economic value for the purchases. By mentality, Swiss, Germans or Japanese pay more attention so that used goods do not lose their value so quickly. Hence used goods have higher economic value in these countries than in others.
From the press release:
Neuchâtel, 03.04.2017 (FSO) – Turnover in the retail sector rose by 0.5% in nominal terms in February 2017 compared with the previous year. However,

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Weekly Sight Deposits and Speculative Positions: SNB interventions are rising again

22 days ago

Headlines Week April 03, 2017
We were arguing in the previous months, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
The tendency of point 3 had been interrupted when the ECB appeared to be less dovish.
FX Last week:
Low Eurozone inflation let the euro fall again versus both dollar and Swiss franc.
The EUR/CHF ended at 1.0680 for the week.

Euro/Swiss Franc FX Cross Rate, April 03(see more posts on EUR/CHF, ) Source: markets.ft.com – Click to enlarge

SNB sight deposits
Swiss private investors do not export

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Weekly Speculative Positions: Last Reduction of Euro Short Positions?

22 days ago

Swiss Franc
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
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.
CHF Speculative Positions
Last data as of

Read More »

FX Weekly Review, March 27 – 30: Euro breaks down against USD and CHF

23 days ago

Swiss Franc Currency Index
Weak inflation figures in the euro zone let the common currency fall against both the dollar and the Swiss franc.
Still last week, the Swiss Franc index had some losses against the US dollar index.

Trade-weighted index Swiss Franc, April 01(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for

Read More »

FX Weekly Review, March 27 – 31: Euro breaks down against USD and CHF

23 days ago

Swiss Franc Currency Index
Weak inflation figures in the euro zone let the common currency fall against both the dollar and the Swiss franc.
Still last week, the Swiss Franc index had some losses against the US dollar index.

Trade-weighted index Swiss Franc, April 01(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for

Read More »

Weekly Sight Deposits and Speculative Positions: SNB interventions are rising again

28 days ago

Headlines Week March 27, 2017
We were arguing in the last weeks, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
Point 3 was not fulfilled last week.
FX Llst weeks:
The EUR/CHF suddenly appreciated with the ECB meeting, when Draghi seemed less dovish than before. The rate rose from the previous 1.0650 “intervention level” to over 1.0750. With the SNB meeting, the EUR/CHF receded again a bit. But as we see below, the FX rate is still at the mercy of the Swiss central bank.

Euro/Swiss Franc FX Cross Rate, March

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Weekly Speculative Positions: Continued reduction of Euro Shorts

28 days ago

Swiss Franc
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
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.
CHF Speculative Positions
Last data as of

Read More »

Weekly Speculative Position:

28 days ago

Swiss Franc
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
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.
CHF Speculative Positions
Last data as of

Read More »

FX Weekly Review, March 20 – March 25: Dollar Bottom Near?

March 26, 2017

Swiss Franc Currency Index
In the last week, the Swiss Franc index recovered and gained about 2%. The dollar index lost 1.5%,

Trade-weighted index Swiss Franc, March 25(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for exchanges).

Contrary to popular believe, the CHF index gained only 1.73% in 2015. It lost 9.52%

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2016 Annual Report of the Swiss National Bank

March 23, 2017

The Swiss National Bank carried out foreign exchange interventions totaling 67.1B Swiss francs in 2016 in order to counter “an undesired tightening of monetary conditions,” the central bank disclosed in its annual report.
That was down from 86.1B francs in 2015, when the SNB intervened heavily at the start of the year following its decision to remove a cap on the franc’s value against the euro.

SNB Sight Deposits are a proxy of SNB interventions – Click to enlarge

Download PDF.

Tags: Featured,newslettersent

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Swiss Trade Balance February 2017: imports “outperform” exports

March 21, 2017

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity increases, while REER assumes constant productivity in comparison to trade partners.
On the other side, a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
To control the trade balance against this “savings effect”, economists may look at imports. When imports are rising at the same pace as

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Weekly Sight Deposits and Speculative Positions: EUR/CHF suddenly higher after ECB

March 20, 2017

Headlines Week March 20, 2017
We were arguing in the last weeks, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
Point 3 was not fulfilled last week.
FX Last week:
The EUR/CHF suddenly appreciated with the ECB meeting, when Draghi seemed less dovish than before. The rate rose from the previous 1.0650 “intervention level” to over 1.0750. With the SNB meeting, the EUR/CHF receded again a bit. But as we see below, the FX rate is still at the mercy of the Swiss central bank.

Euro/Swiss Franc FX Cross Rate, March

Read More »

Weekly Speculative Position: After ECB, Reduction of Euro Shorts

March 20, 2017

Swiss Franc
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
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.
CHF Speculative Positions
Last data

Read More »

FX Weekly Review, March 13 – March 18: Fed Disappoints, Dollar Losses

March 19, 2017

Swiss Franc Currency Index
The Swiss Franc index recovered this week against the dollar index.
The franc improved against both dollar and euro, given that the SNB was not dovish enough,

Trade-weighted index Swiss Franc, March 18(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for exchanges).

Contrary to popular

Read More »

Swiss Producer and Import Price Index in February 2017: -0.2 percent

March 15, 2017

The Producer Price Index (PPI) or officially named "Producer and Import Price Index" describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. See more in Is the Swiss Franc overvalued?.
Producer and Import Price Index in February 2017
From the data release of Swiss Statistics:
Neuchâtel, 15.03.2017 (FSO) – The Producer and Import Price Index fell in

Read More »

Weekly Sight Deposits and Speculative Positions: EUR/CHF suddenly higher after ECB

March 13, 2017

Headlines Week March 13, 2017
We were arguing in the last weeks, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
Point 3 was not fulfilled last week.
FX Last week:
The EUR/CHF suddenly appreciated with the ECB meeting last week, when Draghi seemed less dovish than before. It rose from the 1.0650 “intervention level” to over 1.0750.

Euro/Swiss Franc FX Cross Rate, March 13(see more posts on EUR/CHF, ) Source: Investing.com – Click to enlarge

SNB sight deposits
Swiss private investors do not export their

Read More »

Weekly Speculative Position: Less dovish ECB not include yet

March 13, 2017

Swiss Franc
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
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.
CHF Speculative Positions
Last

Read More »

FX Weekly Review, March 06 – March 11: CHF loses against the euro

March 12, 2017

Swiss Franc Currency Index
The Swiss Franc lost this week in particular against the euro, given that Mario Draghi was less dovish than expected.
If the stronger euro is driven only by speculators, or also by “real money” (investments in cash, bonds, stocks) will be visible in Monday’s sight deposits release.

Trade-weighted index Swiss Franc, March 11(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25%

Read More »

Swiss Inflation Up +0.6 percent against 2016, +0.5 percent against last month

March 8, 2017

The Swiss National Bank will have difficulties to weaken the Swiss Franc, because she is obliged to maintain her mandate, the avoidance of inflation. Already in January 2015, she gave up, because continuing interventions – at the excessively high euro rate of 1.20 – could have endangered her inflation mandate.
Therefore we expect that EUR/CHF moves towards parity, for more read here.
Year on year inflation was 0.6% (+0.5% against the previous month).
Food prices are up 1.8%, expenditures for rent and heating up 1.5%, transport costs went up by 2.4%.
These three categories make a big part of the consumer basket of poorer people.  Given that the SNB has stopped the appreciation of the franc, imported goods are 1.6%

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Swiss National Bank Results 2016 and Comments

March 6, 2017

The Swiss National Bank (SNB) reports a profit of CHF 24.5 billion for the year 2016 (2015: loss of CHF 23.3 billion).
The profit on foreign currency positions amounted to CHF 19.4 billion. A valuation gain of CHF 3.9 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 1.6 billion.
For the financial year just ended, the SNB has set the allocation to the provisions for currency reserves at CHF 4.6 billion. After taking into account the distribution reserve of CHF 1.9 billion, net profit comes to CHF 21.7 billion. This will allow a dividend payment of CHF 15 per share, which corresponds to the legally stipulated maximum amount, as well as a profit distribution to the Confederation and

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Weekly Sight Deposits and Speculative Positions: Each week an intervention record.

March 6, 2017

Headlines Week March 06, 2017
We were arguing in the last weeks, that the EUR/CHF is trending towards parity.
There are three reasons:
Continuing SNB interventions
Strengthening Swiss local demand, as also visible in the GDP release.
Speculators increase their dollar shorts against Euro and reduce them against CHF.
Point 3 was not fulfilled last week.
FX Last week:The EUR/CHF remained around 1.0650, the level where the SNB intervenes.

Euro/Swiss Franc FX Cross Rate, March 06(see more posts on EUR/CHF, ) Source: markets.ft.com – Click to enlarge

SNB sight deposits
Swiss private investors do not export their massive trade surplus with assets in foreign currency, apparently because valuations of stock markets

Read More »

Weekly Speculative Position: More CHF Shorts, Less EUR Shorts this time

March 6, 2017

Swiss Franc
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
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.
CHF Speculative Positions
Last

Read More »

FX Weekly Review, February 27 – March 04: Dramatic Shift in Fed Expectations Spurs Dollar Gains, but Now What?

March 5, 2017

Swiss Franc Currency Index
The Swiss Franc index remained in its ranges. It is now trending downwards, while the dollar index is strengthening

Trade-weighted index Swiss Franc, March 04(see more posts on Swiss Franc Index, ) Source: markets.ft.com – Click to enlarge
Swiss Franc Currency Index (3 years)
The Swiss Franc index is the trade-weighted currency performance (see the currency basket)On a three years interval, the Swiss Franc had a weak performance. The dollar index was far stronger. The dollar makes up 33% of the SNB portfolio and 25% of Swiss exports (incl. countries like China or Arab countries that use the dollar for exchanges).

Contrary to popular believe, the CHF index gained only 1.73% in

Read More »