by George Dorgan
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We have always emphasized that the SNB intervenes between 1.08 and 1.0850. Even if there was no change in sight deposits the 1.08 “line in sand” broke. Via ForexLive US election jitters kicked in yesterday as concerns grow on the fall-out and we’ve seen a sharp rise in the franc across the board EURCHF yesterday fell through 1.0800 which has been widely perceived as the SNB unofficial CHF cap but they’ve been notable by their absence. USDCHF has fallen further to 0.9712 this morning dragging EURCHF down to 1.0754. So is 1.0700 the new 1.0800? or 1.0750 even? Fwiw my take is that the SNB are fearing further carnage next week post-election and deciding not to jump in too soon. Plus CB intervention is always more effective when the markets gone too far the other way. Recent intervention has seen sharp rallies but always running into sellers, most notably last week with 1.0000 easily capping a decent SNB-led spike and it’s been a steady descent since. Don’t rule out the SNB jumping in today/tom just to remind traders they’re never far away and I’m happy to start a long trade with a small buy into this fall but many traders will not need reminding of the last time they became too dependent on the SNB to bail them out.
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We have always emphasized that the SNB intervenes between 1.08 and 1.0850. Even if there was no change in sight deposits the 1.08 “line in sand” broke.
Via ForexLive
US election jitters kicked in yesterday as concerns grow on the fall-out and we’ve seen a sharp rise in the franc across the board
EURCHF yesterday fell through 1.0800 which has been widely perceived as the SNB unofficial CHF cap but they’ve been notable by their absence.
USDCHF has fallen further to 0.9712 this morning dragging EURCHF down to 1.0754.
So is 1.0700 the new 1.0800? or 1.0750 even?
Fwiw my take is that the SNB are fearing further carnage next week post-election and deciding not to jump in too soon. Plus CB intervention is always more effective when the markets gone too far the other way.
Recent intervention has seen sharp rallies but always running into sellers, most notably last week with 1.0000 easily capping a decent SNB-led spike and it’s been a steady descent since.
Don’t rule out the SNB jumping in today/tom just to remind traders they’re never far away and I’m happy to start a long trade with a small buy into this fall but many traders will not need reminding of the last time they became too dependent on the SNB to bail them out.
I didn’t make that mistake then and warned against it for many months before the SNB removed the cap. For that reason I’m not going to be jumping in with any sizeable trade just yet and I’ll be keen to sell any longs into rallies to re-assess.
Whether Clinton or Trump make it first past the post we could see some flight to quality next week that is by no means factored in yet.
