When Will SNB Step in to Halt Swiss Rise?

The Swiss Franc is still finding support from the better than expectedearnings report from Credit Suisse on Thursday. Optimism is buildingthat other Swiss banks such as UBS will see similar results.

The Swiss Franc is still finding support from the better than expected earnings report from Credit Suisse on Thursday. Optimism is building that other Swiss banks such as UBS will see similar results.

A comment by Swiss National Bank Chairman Hildebrand earlier this week may have inadvertently triggered the current Swiss Franc rally. Hildebrand said “Before we look at steps like negative interest rates, you have to have patience to let the medicine work.” Some traders have interpreted this comment as pro-interest rate cuts while diluting his comment late last week of a possible intervention.

The comment may have been taken out of context. His statement was directly related to a question about interest rates and should not have been interpreted as an abandonment of intervention techniques to combat deflation.

The current break in the USD CHF has erased all of the gains triggered late last week by the Swiss National Bank’s threat of intervention. A quick, excessive rise in the Swiss Franc will most likely catch the eye of the SNB.

The EUR CHF is getting close to the level it was at last week when the SNB issued its intervention warning.

Traders have to keep in mind that the mission of the SNB at this time is to combat deflation and increase Swiss exports. The trick to the trade will be identifying which price level in the EUR CHF will trigger SNB action.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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