Posts tagged 'euros'

The SNB eats euro cake

How many reserve assets does it take to screw a Swiss franc into a euro-sized peg?

Answer: this much (so far): Read more

And off to the basis swap market we go…

From ICAP Research’s Chris Clark, a chart that shows the net change in the EURUSD basis swap rate in the past week Friday, February 24 – Friday, March 2:

 Read more

Chinese CNH – YOURS!

Something is happening in China.

That’s the ominous title of an FX note posted by George Saravelos of Deutsche Bank on Friday morning. Read more

Some euro banknotes are more equal than others

With market chaos still firmly gripping the eurozone system, it may be time to tackle the next possible hotspot –  the issue of eurozone settlement mechanics.

Luckily for us, John Whittaker, an economist at the University of Lancaster, has just come out with a a great paper which tackles exactly this point (H/T Tracy Alloway). Read more

Overnight deposits at ECB reach new high

Overnight deposits at the European Central Bank reached a new high for the year Monday, reflecting new worries about the sovereign crisis and the end of the ECB’s monthly reserve period, the WSJ reports. Bank deposits reached €197.75bn ($270.5bn) Monday, ECB data showed Tuesday, surpassing the prior year high for 2011 of €181.788bn, recorded Friday. Deposit levels of above €100bn are considered to be a sign that banks are turning to the ECB as a safe haven because they are wary of lending to one another.  Aside from market tensions, overnight deposits tend to rise toward the end of the ECB’s reserve period, which ends Tuesday, as banks store excess liquidity in the facility after meeting their own reserve requirements for the month, says the Wall Street Journal. The ECB’s all-time overnight deposit high of €384.3bn was reached in June 2010, driven by uncertainty about the then nascent debt crisis and an abundance of liquidity in the market as banks prepared to repay a 12-month ECB refinancing operation. Overnight deposits reached €297.4bn in November 2008, following the collapse of Lehman Brothers.

What will Switzerland do with all those euros?

Switzerland’s decision to suppress Swiss franc strength via unlimited foreign exchange intervention will see the Swiss National Bank accumulate untold amounts of euro reserves, writes FT Alphaville. How the SNB chooses to invest those euros will be watched closely. Among the options are investing in core eurozone or periphery debt — both of which carry risks, notably by aligning Switzerland’s interests ever more greatly with those of the eurozone. This is why Deutsche Bank’s George Saravelos says the SNB could be tempted to take reserve management off-balance sheet. One way to do this would be to start its own sovereign wealth fund instead. Read more

SNB euroquake, the analyst reaction – part one

The SNB has come out all guns blazing on Tuesday in a bid to weaken the Swiss franc.

And it’s the use of some key expressions that really stands out. Among them, “acute threat”, “no longer tolerate” and “unlimited quantities”. Read more

Hedge commodities in euros from Monday

Olivier Jakob, at Petromatrix (who we know we quote a lot, but only because he really does constantly come up with interesting points) alerts us to the fact that from Monday onwards investors will be able to trade euro-denominated contracts on certain Nymex energy products.

As he points out: Read more

SNB takes SFr14bn foreign exchange hit

The Swiss National Bank on Wednesday revealed the cost of its massive foreign exchange interventions to restrain the value of the franc, with losses of more than SFr14bn ($13.3bn, €10.4bn) in the first half of this year, reports the FT. In recent months, the SNB has raised its foreign exchange holdings by SFr132bn by selling francs for other currencies, mainly euros, in a fruitless bid to hold back the value of one of the world’s traditional safe haven assets. For more see FT Alphaville.

Make no mistake, the ‘Baltic Three’ are in the dock

While Latvia’s central bank stands firm in the face of adversity singing a united chorus of “we shall not devalue, we shall not devalue,” all indications still remain that they will.

First proof of the inevitable comes in the form of the Latvian interbank overnight rate, which on Thursday soared to a fresh high of 12.80/16.80 per cent. Read more