The bottom line is that in August Swiss reserves rose by CHF 115b. A monthly increasing of 50% (Staggering). Domestic liquidity (sight deposits) rose an (unbelievable) 390% (CHF 49b to CHF 191B). This information covers the period when SNB bet the farm in an effort to stabilize/weaken the CHF.
……So far, the actions by the SNB have been successful. The key EURCHF rate has been steadily above the 1.20 level. The folks in Zurich/Basel are touting the SNB action as a big success. It might be a bit early to celebrate
Euro troubles Pound Swiss Franc
Concerns about its European trading partner dragged the Pound lower against the greenback. Target for the initial primary decline is $1.53*.
* Target calculation: 1.59 – ( 1.65 – 1.59 ) = 1.53
The Swiss Franc is now headed for a test of parity against the greenback, dragged lower by its peg at €1.20.
* Target calculation: 1.20 – ( 1.40 – 1.20 ) = 1.00
Swiss Franc weakens on SNB action
The Swiss National Bank (SNB) threw a similar lifeline to Swiss exporters and tourist industry, pledging to support their currency at 1.20 Swiss Francs against the euro with “utmost determination” and to “buy foreign currency in unlimited quantities” to achieve this. [Bloomberg]
The euro jumped from 1.10 to 1.20 CHF on Tuesday and has been trading in a narrow range between 1.20 and 1.21 since then. Further speculation is inadvisable unless you have deep enough pockets to take on the SNB.
No European trend
The Euro is testing resistance at $1.455 after consolidating between $1.40 and that level for the last two months. Twiggs Momentum oscillating in a tight band around zero reflects no real trend and this is likely to continue unless the Fed introduces a new round of quantitative easing.
* Target calculation: 1.45 + ( 1.45 – 1.40 ) = 1.50
The Pound is testing resistance at $1.66 against the greenback. Breakout above the 2011 high of $1.67 would signal another primary advance, but Momentum is falling and we can expect strong resistance between $1.66 and $1.70.
* Target calculation: 1.65 + ( 1.65 – 1.60 ) = 1.70
The Swiss Franc is testing support at $1.25 against the greenback. Respect of support is likely, but breakout above $1.30 is also unlikely in the short-term unless Ben Bernanke announces further quantitative easing.
