Holy crap



One really wonders what they were expecting when they pulled the 1.20 floor.   One can only hope that they had researched positioning and found that the load of lazy longs and barriers etc that existed 18 months ago had been bored out of existence.

If not, then someone's going out of business today.

One really has to wonder if they thought a slightly more negative deposit rate would offset the shock value of pulling the rug floor out from EUR/CHF.   Swiss equities are voting with their feet....


Regardless of how oddly this was handled, it should serve as a reminder that unconventional policies will not persist forever.....
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January 15, 2015 at 11:11 AM ×

Central Bank credibility has Gone. ..

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checkmate
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January 15, 2015 at 11:26 AM ×

C Says
"Out of business today". Probably the most accurate description we will see today. Strategic blowup.

To avoid further confusion of the 'name' C says retires today.
At least one person goes whoopee.

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Anonymous
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January 15, 2015 at 11:33 AM ×

This has to be co-ordinated. Carney on about ECB, now SNB act.

Either the ECB program is going to be much bigger than expected or there's global intervention coming.

You only removefloor if a bigger player is coming in.

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Anonymous
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January 15, 2015 at 11:42 AM ×

@Anon at 11:33am
I feel the same, but Can Draghi REALLY pull the trigger?

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Anonymous
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January 15, 2015 at 12:23 PM ×

Did Polish banks just s..t themselves?

http://www.bloomberg.com/news/2015-01-15/polish-banks-zloty-slump-as-swiss-franc-mortgages-get-expensive.html

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Leftback
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January 15, 2015 at 12:55 PM ×

Most likely the SNB saw the prospect of having to cope with dislocations in FX after ECB action, and they realized the cap was going to be challenged, so they decided it was best to front run the ECB by causing a dislocation of their own.

Agree with anon. Something big is coming. This is not going to be the only shocker this month. In recent years we have seen clusters of central bank interventions, so it's likely the phone lines were busy between Frankfurt and the SNB.

One thing this does is to create another attractive safe haven currency for those who aren't big fans of USD and JPY. This action might mark the top in DX. Commodities of all flavors are up today.

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CV
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January 15, 2015 at 1:07 PM ×

Well, let us keep this simple LB. When you see moves like this; do you

a) Buy deflation

b) Buy inflation

A EURCHF for the right answer ;)

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Leftback
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January 15, 2015 at 1:25 PM ×

c) Sell dollars!

Buy reflation trades :-)

AUD and CAD already got the message, the rest will follow once the squeeze in XXXUSD gets started.

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Anonymous
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January 15, 2015 at 1:41 PM ×

"TheBondStrategist Central Bank credibility has Gone."

Most of all Yellen's credibility....

5 Year breakeven inflation rate:

https://research.stlouisfed.org/fred2/graph/?graph_id=216229

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theta
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January 15, 2015 at 2:31 PM ×

LB, does the rest include EUR? Because so far it seems EUR didn't get the memo

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Macro Man
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January 15, 2015 at 2:44 PM ×

FWIW, I bought tiny USD/CHF this morning. I suspect Jordan will get an earful and look to guide EURCHF back up to 1.10 or so...plus, who's left short CHF?

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CV
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January 15, 2015 at 2:46 PM ×

Absolutely MM ... CHF funded carry trades are ripe for the picking here. This is equivalent to a firesale for putting on some of these trades.

Of we go, sailing into the wind of the next low yield fuelled bubble!

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washedup
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January 15, 2015 at 3:19 PM ×

Hey Left - I woke up with an ache in my lower extremities, there may be squirrels in my attic, and one of the planks in my backyard in definitely rotting. Any thoughts?
I know, I know, sell USD.....
Sorry Sir, couldn't resist that dig - hope you're enjoying the gold move.

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macrogoldman
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January 15, 2015 at 5:59 PM ×

SNB move to pull CHF peg makes me think--macromen what would global borrowing costs be if central banks were not pegging rates at zero (or lower)---my guess is higher--a lot higher (course that would be bad--but honest)

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