There's some serious selling of the CHF going on. 7/15/20

MikeWolski · July 15, 2020, 11:37am

Hi all.
There’s always a time that a particular currency will exhibit some good buying, or some good selling. It comes. It goes.
Well, right now, we surely have the Swiss going through some pretty good selling. Look. I don’t get too excited about a currency doing this. But. When it comes to the CHF, I take note. The reason…I’m thinking the SNB just might be intervening.
Take a note of my screen shots that I just took.
It’s 7:30 am EST (New York time). Wednesday. 7/15
I want to note this and maybe look back and see if this truly was something. Or not.
The last 4 hr look. I made this easiest to understand. Swiss selling.

The last day look.

The CHF on my charts.
4 hr time frame.

Even the 1 hr time frames.

Look. All I’m wanting to know is whether the SNB is intervening.
And if so. What does this mean, in the broader perspective in the market.
Anything?
Time should tell.
Or else, this is just nonsense. We’ll see.

Mike

P.S. - There’s no economic data for them. Nothing in ForexLive, regarding any kind of news. And the sentiment for the broad market right now is leaning more risk-on. All we have here is price action moving.

frandlost · July 15, 2020, 12:50pm

Thanks for the post Mike!

Unfortunately, and embarrassingly, I have to admit I’m strictly a chart reader. I would imagine more informed members will be stopping by shortly.

KC

BTW… I have to say your tracking of the market movements is beyond impressive!

MikeWolski · July 15, 2020, 7:03pm

It’s me again. Sorry.
But…I’m telling you…something is going on with the CHF today.
And my guess is the SNB is intervening.
It’s 2:46 pm EST now, and their time will be around 8pm or so. Anyway. I have some thoughts about this. But let’s take another look at the latest data.
4 hrs.

Daily.

My 4 hr time frame charts.

Daily time frame charts.

Well, I’m gonna make a call to someone.
Peterma…
You still awake?
Talk to us. Know anything?

This is something I’ve been thinking about. Peterma, tell me if I’m way off, or not.
But, do you think that maybe the SNB see’s some kind of risk-off coming. Like soon. And they’re intervening now to mitigate their currency from taking off high?
Know what I mean?

Look. I’m just wondering when the other shoe will drop. Like what happened at the beginning of March.

Well, I’m glad I started this thread, to document this run that the CHF is doing.
Hey…if it’s nothing…then it’ll get stuck way in the back of this forum. No big deal. But, if I am seeing something, then maybe time will bear me out.

New trend starting
Risk-off sentiment lurking around the corner
European economic changes

I don’t know. Honestly. It all could be nonsense.
But, is incredibly interesting to me, nonetheless.
Mike

MikeWolski · July 16, 2020, 2:15pm

Hello again.

Well, it’s the day after, and the CHF is more calm today. But, you have to admit that the EOD numbers for the Swiss yesterday was impressive.

So. I dug a little farther. And thanks to our very own BabyPips, PipDiddy article, 2 days ago, I think it clears things up for me.

See for yourself.

My mind is made up. They intervened yesterday. And I think that Mr. Jordan gave us heads up on Tuesday. For Wednesday’s move.

Ok. That’s nice. So where does leave us?
Well, as traders. Knowing some fundamental reasons behind price action is nothing but being prudent. That is having an edge in the market. Here are some of the knock-off effects I will think about, moving forward.

The cats out of the bag. Will the investors, other central banks, follow suit and take the CHF lower also? Basically, keep tabs on their trend with this in mind. This is definitely not a given, cause money wants to be parked in the CHF.
How much will this affect the EUR? There is major correlation with these 2 currencies. Therefore watch and beware.
In regards to risk-off sentiment, when it comes, will money rush to the JPY instead?
What will Trump think? (J.K.)

Those are some things I believe we should keep in mind.
It’s all about knowing what’s going on in our field of expertise.

Mike

Falstaff · July 16, 2020, 4:50pm

Hi Mike, saw your posts yesterday and was thinking “Why would SNB want to drop the price - seeing as it’s pretty much regarded as a safe haven ? and low price would encourage buyers at the expense of the SNB selling ?”

Hadn’t realised that they were actually buying other currencies though - which will give them some external assets and I hadn’t realised they were already on “Negative Interest Rates” - which should deter buyers too - nor did I know they fear deflation - that’s not good.

I was looking at it more from the EUR side - since we know that Poland elected a somewhat sceptical president again on Tiesday- the Poles just having escaped from One “Centralised Foreign Government” really don’t like being bossed about by another one in Brussels or Strazbourg (depending what day of the month it is !) - We also know there are rumblings about whether Italy, Spain, Ireland and I believe Greece too really want to stay in and the Frugal 4 are reticent to back the “proposed baleouts” to other countries - and now it appears that Germany (Who basically ARE the EU ) - as well as having recent legal rulings that it is unconstitutional for Germany to take orders from the EU - are desperately worried about the West’s deteriorating relationshp with China - Since Germany Exports cars to China worth 300 BILLION a year ! AND additionally that ALL the Huge “Silent running Diesel Engines” propelling Chinas Multiple Submarine Fleets around the world - are made in Germany !

Then you have the huge black (OOPS !) hole left by Brexit in the EU’s accounts (which never manage to pass an Audit) - and which noboby else seems willing to contribute towards filling, The huge potential damage to the German Car industry which Trade Tarriffs against the UK potentially could cause and their recent proposals that the EU “Must” be permitted to levy direct taxes on the citizens of the individual member countries in addition to the normal taxes the Governments of those Countries levy !

Coupled with the Eu’s consistently declining value share of World Trade and the “EU Govt” absolutely Dismal show of Leadership, support and / or any form of Competence in dealing with the Bat-Flu - which cause many if not most people to wonder "what value membership DOES actually confer ? " - must make any “Safe Haven” currency Guardian - extremely nervous that their own currencies must be pushed so high in any panic flight from the Euro - that they would be unable to avoid Deflation and the death of exports for their domestic economy.- The weapon of ever increasing negative interest rates may deter some - but then low prices currently could overcome some of that action.

As you say - difficult one to call !

[And just to futher add to their worries is the potential collapse of the USD - should the Marxists somehow defeat Pres Trump in November ! ]

peterma · July 16, 2020, 5:59pm

The SNB are notoriously coy about intervention - remember back the peg removal caused chaos to brokers and traders alike.

The rate has been on a downward line for much of 2019 so less need for massive intervention - but covid has changed things - the CB is on alert.

One marker easily available is the SNB foreign currency reserves - see what has been happening Apr/may/june

Wonder were they buying Euros

SwissForeignCurr

image - tradingeconomics

Edit: meant to include this post in May - worth a read

Pippo · July 16, 2020, 10:41pm

The franc is a managed currency so it woulldn’t be a suprise if SNB is active in the market to check the franc’s appreciation. Back in March/April, they were defending the 1.05 level for EUR/CHF.

MikeWolski · July 17, 2020, 4:11pm

Hi again.
It’s Friday, getting a little close to the end of the week. About noon now, EST.

I’m not really gonna make this a big deal…well, maybe for this week only. But don’t look now, the market says “we want more Swiss Francs…sorry SNB!”

All that nonsense I wrote up earlier this week was…well…nonsense maybe. Take a look. What a complete turn around.

shrug
What can I say?

IF it was a SNB intervention, the market says “So what. We don’t care.” Immediately afterwards. Money wants to buy more CHF.

So, now, I’m wondering what the SNB is thinking. Maybe…
“We’ll just have to do it again.”
“We will win.”

Ok. But. You have to dig a little further here. Like I did. And see all what else is going on.
Do you remember some of the things I’ve mentioned?
Well, we need to see what the EUR is up to. Today. Alongside this CHF buying.

Now, don’t make me break out my excel tables. You know, the one’s with all the colors. In any case. You can see it here. The EUR is in a bull market. You can tell by way of my trend indicator. 5 & 9 ema lines. On every EUR pair, they all are signaling a bull market (5 above 9).

So also, today. You can see that the last daily candle (today) are all green. Except against the CHF. Meaning they are having a good bullish day today.

My point.
Those 2 currencies normally ride together. Most of the time. Guaranteed. I have proof (I keep track of them everyday). And well, today is no different. Therefore, I believe, in some fashion, their in concert together today.

Basically, it’s not just a Swiss dominating day today. There’s a little more going on. And it wouldn’t be prudent to think only about the CHF, without the EUR also.

That’s nice.

Moving forward…I’m wondering if the SNB will strike back. Again.
That’s if they did intervene (we do not have definitive proof of that. Just a strong hunch.)

Unless Peterma visited them in the office.

Alright.
Again. Interesting stuff to me, that’s all.
Mike

peterma · July 17, 2020, 5:43pm

Aye, I call it ‘make me think’.

Back when the peg was active at 1.20 I wondered why peg against the Euro, how did they enforce the peg, what was the effect swissy vs US Dollar.

Seems that there was a Eurozone crisis and money headed for the hills (the Swiss mountains The SNB were alarmed - EZ their next door neighbour and big trading partner, suddenly it was one way traffic over the border - into the Swiss that is - poor old Swiss exporter didn’t stand a chance - being surrounded by Italy, France and Germany, all EuroZone.

Worse still, the Swiss importers having a field day - no language barriers even to contend with - but even being a CB sometimes it’s hard to hold back the tide.

So the SNB announced -‘no more peg’ and the rest is history.

But what did they do differently since? - nothing except no more announcements.

But how come the peg happened also on USD/CHF - and it was on this instrument that most brokers and traders fell down when it was lifted.

Simple - Swiss economy relies on EZ economy - what’s good for the goose is good for the gander.

Do the SNB look to intraday? - nah they look at likely trend up ahead with a firm eye on the Euro.

Wee quick example of the entanglement of Switzerland and EZ - did a train journey right round Switzerland a few years back - flew into France - walked out a different exit door for Switzerland, train announcements in French - later in the week the announcements in German, and later we went into Italy. Later back in the mountains crossed back into France - cash machines giving choice, do you want Swiss Franc or Euro, then back in Swiss.

All the time no borders, want to pay in Euro? - no problem.

Mrs wants to go back but this time in summer

.

peterma · July 17, 2020, 6:01pm

Btw - in all that rambling above I didn’t mention that the SNB act when the Euro is likely to be weak and CHF likely to be strong (a generalization I know).

So early days of covid that cap fits - thus SNB intervention - i.e. selling CHF

But figure how the market figures - today the EU27 leaders having a tete a tete in Brussels - first face to face (with masks) since covid - and no major fall out - just the usual positioning.

The sound bytes are positive - maybe not full agreement on the covid recovery fund (purpose of the meet) but the train has left the station.

So would the SNB jump in today?![EU-Summit-Today|516x336]

Edit - just thought I’d post this image (courtesy of BBC) on handshakes and face to mask meeting today - in a few years our children will not believe it.

EU-Summit-Today

Falstaff · July 17, 2020, 9:47pm

That’s true Mike and you can see from the “public information releases” from teh establishment and the BBC that all is “Sweetness and light”

However SNB and the PROFESSIONAL traders will be looking a little deeper into what is Really going on in there !
.

Whatever the eventual outcome, (And whatever the propaganda machine puts out it is by no means obviously “OK” ) I’d advise any traders to be a little cautious in trading around this area on a medium to long term basis.

MikeWolski · July 17, 2020, 10:15pm

Thanks F!

I’m looking forward to that later on.
But, I so appreciate all your input.

I seriously hope people around here appreciate the things you bring to the table, as much as I do.
There’s nothing like learning from you guys that have been around for such a long time!

Thanks F!
Mike

Ledgerla12 · August 6, 2020, 4:19am

Wow! That’s impressive Mike. Such inputs are much appreciated.