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’Le plan, negatifs taux d’intérêt – redux
Oh dear.
The ‘psychological shock’ of Wednesday’s moves by the Swiss National Bank to stem the rapid rise of the franc is already wearing off — at least in the FX market.
Frankly, that’s no surprise.
Le plan, negatifs taux d’intérêt
On Wednesday, the SNB unleashed it’s ultimate Swiss franc depreciation plan — le plan, negatifs taux d’intérêt — a.k.a the strongest signal yet that it is prepared to take interest rates negative to curb Swiss franc strength.
The SNB can change your franc in seven days!
Look into our eyes. Not around the eyes. Deep, deep, deep into our eyes. You feel you’re getting sleepy. You feel safe and complete. You do not want to hold the franc any longer. You think the franc is rubbish.
Swiss bank avalanche
This might be a deferred sell-off following Monday’s holiday in Switzerland. In the words of one analyst though, they’re ‘stuck between a soft dollar and a hard franc…’
(That’s because the wealth management arms of both banks have mainly US dollar revenues and Swiss franc costs).
The Swiss franc’s safe-haven status, a visual interpretation
The Swiss franc is on the rise against the euro and the dollar again on Wednesday thanks, as multiple market reports state, to its safe-haven status.
In fact, the currency was last quoted at about 1.158 versus the euro and 0.7996 against the dollar.
What’s as good as gold, but potentially much more volatile?
The Swiss franc.
It has indeed often been cited as being as good as gold.
But while, on the surface, its similarities with the yellow metal might seem obvious, there is one very important difference to bear in mind.
Imagining hypothetical split €-periphery exchange rates
HSBC’s macro currency strategy team has a vision.
A vision of how the euro might have performed had it been split into two currencies back in 2009.
Using the performance of the Swiss franc as an input,
What’s a Swiss central bank to do?
As has been well documented, the Swiss franc’s relentless rise has been causing no end of headaches.
Swiss exporters, Swiss banks and even Polish and Hungarian mortgage holders have all been affected.
Shadow currencies lurking behind a new dollar smile
G3 currencies are just so … démodé.
Where once the US dollar, euro and yen indisputably dominated global currency trading, there are now alternatives. The S3 currencies. So says UBS strategist Syed Mansoor Mohi-uddin in a short note.
Gold, Myrrh and the Confoederatio Helvetica Franc
The Swiss National Bank kept interest rates unchanged as expected on Thursday, saying it would leave the target rate for three-month Libor at 0.0-0.75 per cent, ideally at the lower range of around 0.25 per cent.
The Swiss franc is as good as gold (literally)
We like watching correlations here at FT Alphaville.
And here’s a new one to add to the melting pot.
According to the FX strategy team at UBS, the Swiss franc is increasingly correlating with the price of gold — a relationship traditionally held (although inversely) with the dollar.
25 interventions in a one week band
Ben Davies, CEO of gold hedge fund Hinde Capital, made an interesting point on the subject of currency intervention in a recent letter to investors, as picked up by the King World News blog.
He alludes to the writing of Henry Hazlitt,
Bonds, breaking for the Swiss border
Tinned food? Check. Bunker? Check. Emergency smokes? Check.
Rolex watch, Toblerone, fondue kit, cuckoo clock? Check.
There’s a very Swiss theme to this week’s European Credit Alpha note from Barclays Capital.
Missing from the Swiss central bank: CHF6.3bn (updated)
Just out from the Swiss National Bank — some rather interesting FX reserve figures.
The SNB’s currency reserves dropped to CHF225.8bn ($213.6bn) in June — a decline of CHF6.3bn from May. Considering that in that month the central bank’s reserves jumped by an astounding CHF78.8bn — or CHF138.5bn in the first five months of 2010 — it seems like quite a step change in policy.
Meet the new Deutsche Mark
Or the Swiss franc, as it’s more commonly known.
According to Mansoor Mohi-uddin, managing director of foreign exchange strategy at UBS, one of the mega currency trends of the next decade will be the increasing use of the Swiss franc as a proxy for the old German Mark.
Swiss intervention in context
How big was the Swiss National Bank’s forex intervention in May?
This big. (Click to enlarge and get the full Hildebrand experience):
That’s from Sean Corrigan at Diapason Commodities, who notes that according to provisional data released by the Federal Statistics Office on Tuesday,
Chart du jour – EUR/CHF
SWISS NATL BANK DECLINES COMMENT ON INTERVENTION VS EURO REPORT
Ahem.
Earlier in the session, the EURCHF cross hit a record low on continued concern about the situation in the European periphery.
Bonfire of the currency correlations
Or, what central bank intervention can do to correlation-based currency models.
Late last week it looked like the Swiss National Bank stepped in to move the Swiss franc lower:
Unsurprisingly some market participants are a touch peeved at this.
Cuckoo clocks and chopsticks at dawn
The Swiss franc reached a record against the euro on Tuesday — and that’s despite a recent pledge by the country’s central bank that it would help counter “excessive appreciation” in the currency.
The SNB can’t help intervening
Looks like the SNB has been at it again:
The Swiss franc weakened as much as 0.4 per cent on Tuesday, the most since February 5, according to Bloomberg. There was no comment from the SNB on whether it was down to central bank intervention,
A little perspective on the euro?
The “everyone is shorting the euro” story continued to hold court in the financial media space on Monday.
Bloomberg noted that:
“Euro Worst to Come as Greece Hammerlocks ECB on Rates ”
While Reuters observed:
Swiss intervention in Asia overnight?
It’s no secret in FX markets that the Swiss National Bank eagerly defended the 1.50 EURCHF level for most of 2009.
Many analysts, however, were under the impression the days of SNB intervention were now long gone.
Swiss franc forex standoff
A Mexican standoff is mounting between Switzerland’s central bank and the outlaws of the forex markets.
On Monday morning traders are again testing the Swiss National Bank’s resolve to stop further franc appreciation,
A little more intervention, a little less action
You spend years developing and structuring a single European currency. You take care mandating the terms and conditions for entry. You reject unworthy applicants. You launch with great success. You become the key alternative choice for settlement of international claims and central bank reserves.
An unconventional truth for Credit Suisse
In a bid to support the Swiss economy and particularly the export sector from a rapidly appreciating Swiss franc, the Swiss National Bank (SNB) began intervening in foreign exchange markets on March 12.
Tick, tick, tick…Switzerland
The Telegraph’s Ambrose Evans Pritchard is a little worried about Switzerland. Specifically about the prospect of imminent deflation. As he writes on Monday:
Watch Switzerland closely. It is tipping into deflation,
Swiss QE, déjà vu
So Switzerland’s starting quantitative easing?
This chart, of the Swiss money supply (M1) between 2003 and 2008 begs two particular questions:
Just when did QE really begin and how far up is that line going to go?
(HT Sean Corrigan of Diapason Commodities)
Related links:
The Swiss franc factor
For those concerned about the prospect of a round of competitive currency devaluations, the Swiss National Bank’s abrupt move on Thursday to intervene to push down the Swiss franc raised alarm bells.
It was the first time a leading central bank has intervened in the forex markets since Japan sought to weaken the yen in 2004,
Swiss struggles
The Swiss franc, along with Swiss banks, is taking a beating this morning.
In fact, RBC Capital Markets contend the currency is rapidly losing its safe haven status and decoupling from the US dollar.
A financial black hole in Geneva
Geneva is home to one of the world’s largest private wealth industries and preferred tax-efficient base for hundreds of European finance and trading firms. In this Swiss lake-side city even a croissant can set you back a small fortune. Finding somewhere to shop that is not a luxury outlet selling watches or designer-ware,