SNB & CHF

Interventions:The SNB intervenes for 6.3 bn francs in the week ending last Friday, the week one after Brexit. Already on Day One , the SNB intervened for an estimated 3-4 bn francs This is once again the a new weekly high since the end of the EUR/CHF peg in January 2015. Seven billion sight deposits come from Swiss banks, when fearful investors moved their money on Swiss bank accounts. FX: Unexpectedly for us, the SNB...

This post is motivated by recent headlines suggesting that the Chinese yuan has depreciated in recent days. Here’s an example: China’s yuan weakens to 5-1/2 low as c.bank tolerates depreciation This headline is completely inaccurate – the Chinese yuan has been appreciating in recent days. So that’s one problem I’d like to fix. I’d like to see the media start reporting accurate data on exchange rates, so that we know...

Monday July 4: Five things the markets are talking about Happy 4th of July! Stateside, this is a holiday shortened trading week, one that will be dominated by two fundamental events – Wednesday’s FOMC minutes and Friday’s non-farm payroll (NFP) report for June. With no surprises expected in the minutes, both dealers and investors have very much priced out any possibility of a U.S rate hike occurring within the next...

It never ceases to amaze how vastly different the investment styles of gold paper vs physical traders are: while we have documented previously how the latter tend to buy progressively more the lower the price (as traditional “buy low, buy more lower” investing would suggest), “investors” in gold paper-derivatives such as ETFs and ETPs are quite the opposite: in fact, they rarely buy until someone else is buying and...

Summary Inflation expectations fall in Japan. UK construction PMI fell sharply before Brexit. The Australian dollar recovers from the dip as investors await more results. It is not clear that Brexit has sparked a wave of nationalism or anti-EU sentiment. FX Rates Monday, while Americans were celebrating the original Brexit, the US dollar drifted lower. The Australian dollar fully recovered from electoral...

EM and risk recovered nicely from the Brexit turmoil last week.  Yet we think markets are getting too carried away with the “low rates forever” theme and are likely underestimating the capability of the Fed to tighten before 2018.  This Friday, the June jobs data could spark a shift in sentiment with a strong reading.  Consensus is currently 175k jobs created, up from 38k in May. We don’t think individual EM...

Summary Impact of Brexit will take some time to be seen, but the U.K. is already losing influence. U.S. employment data is not sufficient to get the Fed to hike this month. Pressure continues to build on the BOJ to act. There have been two developments that are shaping investment climate. The first was the dramatic rally in equity markets last week, with many recovering nearly all that was lost on the Brexit...

01.07.2016 09:15  – FSO, Economic Surveys (0353-1606-60) The Used Goods Question Retail sales in several countries like Germany, Italy, Japan and Switzerland continue to fall. 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...

01.07.2016 09:15  – FSO, Social Analysis (0353-1606-70) Swiss Social Security Accounts 2014 Social security expenditure accounted for 24.5% of GDP Neuchâtel, 01.07.2016 (FSO) – In 2014 expenditure on social benefits from the Swiss social security system amounted to CHF 157 billion. This corresponds to a 24.5% share of the gross domestic product (GDP). Compared with the previous year, inflation-adjusted expenditure...

In the sessions before and after the UK referendum speculators in the currency futures did three things. First, they generally reduced exposure.This means gross longs and short positions were reduced. Of the 16 gross speculative currency futures positions we track, 12 fell. Euro: Speculators were divided Second, speculators were divided about what to do with the euro. The bulls added 20.9k contracts to their gross long...