There’s life in the old EURO CHEF (EUR CHF) dog yet – not much – but despite the lack of volatility in the Cross over the last 3 months, it is still just about possible to squeeze a few pips out of this pair. Over and over again.

There's life in the old euro chef dog yet (April 27th 2012) !

So, today April 27th 2012, Mr. Thomas Jordan re-affirms YET AGAIN that the SNB WILL defend the EUR CHF 1.20 floor with the utmost determination….. yada yada yada.

So what does the market do ? It tanks it down from the previous sessions’ dizzy high of 1.2018.5 down to the miserable 1.2009 area.

Do you believe Mr. Jordan, because if you don’t – you may as well run at high speed in the opposite direction of this page right now – you’re in dangerous territory !

I do personally believe that Swiss politics, ‘new hire’ reputation, and macro-economics are all on the side of the believer. 

So, whilst whiling away the many hours of waiting for the EUR CHF floor to be raised to 1.25, like an expectant mother waiting for her baby to arrive, lol, I got to thinking – right – OK – I (me) trust that the 1.20 floor is going to hold, barring any ‘market idiosyncracies’ to steal a phrase off of our esteemed SNB Chief Tommy Jordan.

So with a 2.8 pip spread on Alpari UK, and a daily range of anything more than 5.8 pips upwards, I can pull 3 pips per day, or more if there’s a bit of swinging around within the 5 – 10 pip daily ranges we’ve seen recently.

So I wrote myself a simple little EA for Metatrader 4, that opens up a new buy trade when the price falls below 1.20135, which, with a 2.8 pip spread gives me a nice 3 pip profit at 1.20193.

On a per lot basis that represents a profit of USD 11.02 or GBP 6.79 per pip. That’s $33.06 for each 3 pip trade, per 1 Lot traded, that fires and gets closed out !

Running a simple little backtest from April 5th 2012 – April 25th 2012 that’s just 15 trading days, the EUR CHF price action generated a total 26 winning trades, and obviously there were no losers, as the tight stop at 1.1985 was never triggered.  

Here’s the MT4 report generated (ignore the last quoted trade as it’s the usual MT4 strategy tester glitch) :-

This little EA made 26 winning trades in just 15 days

Remember this is scalable, so purely on one standard contract you could have made $859.56 since April 5th. That’s a nice meal out with a friends and a few rounds of drinks, all on Tommy Jordan – YO!

Risk to reward ratio obviously doesn’t look good at 1:9, using a 28 pip stop of 1.1985, but it’s just a technicality if you believe that the 1.20 floor will hold. This is not your average risk ! Nothing is normal or tradeable normally about this pair just now, and so I’m bending my normal rule of a > 1.5:1 risk-to-reward ratio, because I’ve got a central bank on my side of the trade. Anyhow after the first 9 trades you’re effectively trading with no risk at all, and the profits are likely to continue to roll in, whilst we remain in this incredibly tight range between 1.20 and 1.2020.

Anyhow, it’s just an idea. I’ve been trading this system without the EA, but I’ve missed a few trades whilst I was not monitoring the system,so that’s why I decided to code up the EA – just to catch ‘em all.

Good trading.

First of all, and on behalf of all my readers I’d like to congratulate Mr. Thomas Jordan on his permanent appointment, today Wednesday April 18th 2012, as the 11th new permanent Head of the Swiss National Bank, since the end of World War 2.

We also offer our congratulations to Mr. Fritz Zurrbruegg, who also joins the top team of three who collectively form the governing board at the SNB.

Jordan, a graduate of Bern University joined the SNB in 1997 as an economic advisor, and was promoted to the governing board in 2007.

The third member and new Vice-President is Mr. Jean-Pierre Danthine, who fills the vacant post left by Thomas Jordan..

Here comes the chief

OK fellas. Now the Office Party is over, and you’ve scoffed all the sausage rolls, and drunk all the cheap plonk lets get down to some serious business eh ?

Like, how about raising the floor on the EUR CHF that everyone is buzzing about, from it’s current 1.20 to 1.25 or 1.30 ? Heck, even at 1.30 it’s still overvalued, and we’ve been looking at all the market talk about how it still poses a threat to the stability of the Swiss economy.

We’ve got major players in the FX world such as Barclays Capital, Goldman Sachs and UBS all lining up saying that they’re expecting some kind of announcement on this matter before the end of Q2 this year, possibly sooner now the new SNB head honcho has been named.

The floor was established in September 2011 in response to what the SNB then described as the ‘massive overvaluation’ of the Franc, and has only seen a brief glitch below the 1.20 level that was hastily explained away as a technical glitch by the SNB.

However, the lacklustre performance of the cross this year so far has seen it floundering and wallowing around just a few pips above the floor.

Barclays is the second largest global currency dealer, and their computer models have estimated that the current true ‘market value’ of the Franc is actually around 1.43 rather than 1.25 or 1.30, and because of this, they are forecasting a floor hike pretty soon.

Meanwhile, Thomas Jordan in his inaugural statement has reaffirmed that his top priority is the maintenance of the EURCHF floor.

Trading during the NY LON overlap session saw the EURCHF rise briefly from 1.2011 to a daily high of 1.2032, but the pair has since retraced to around 1.2020, after all the excitement calmed down.

However, there seem to be more credible forecasts for a new floor level of 1.30 than 1.25, although even that level seems like a distant dream for those traders who have major exposure long the EURCHF, and who didn’t get stopped out last week.

However, with EURCHF long swap rates at or near zero (with the exception of some greedy brokers who are charging negative swaps both long AND short the EURCHF) it may be time to think about entering a long carry trade on the EUR CHF whilst it’s close to the floor level, with a tight stop somewhere below 1.1990 depending on how much you trust the SNB to react quickly to another ‘brief’ breach of the floor.

I’m setting my stops at 1.1900 just to be on the safe side. That way it gives the SNB a bit of breathing space if they get hit by speculative short moves lodged with no ‘we’ll swap Euros for Francs agreement’ counter-parties as happened when the 1.20 floor was recently breached. Also, it makes it harder for unscrupulous brokers to spike out tighter stop loss levels.

In fact if you want to be super paranoid that your market making broker is after stopping you out, you couold set up 24 hours SMS alerts to your Smartphone at 25 pip intevals below 1.1990. That way you get to keep control of the absolute timing and execution of your stop orders.

Almost as if someone in the SNB had read my earlier mail today ….

After days and weeks of single digit daily pip movement EUR CHF makes 26 pip move North

During the New York session the EUR CHF pair jumped by a massive (by recent standards) 28 pips, peaking at 1.2034 from an intra-day low of just 6 pips above the SNB minimum exchange rate of CHF 1.20 per Euro.

The only information that seems to be floating around on the news wires just now is a market analysis statement from Goldman Sachs, and particularly a certain Jim O’Neill who seems to have quite a bit of Kudos in the FX analysis arena.

Warning to Bullish Franc Investors

He is setting out a clear warning following last weeks breach of the SNB floor not to under-estimate the resolve of the Swiss National Bank in defending the floor, and warning potential Swiss Franc Bullish investors to watch out.

O’Neill also believes that the recent heating up of the Swiss Franc and the associated market pressure may provoke the SNB to take further action to weaken the Franc, and that may involve raising the minimum exchange rate from 1.20 CHF per Euro to maybe 1.25.

The Swiss government have stated that they feel that the Franc is still too overvalued, and they have indicated that they see the true value as being in the 1.35 to 1.40 region. The problem is that the market is unlikely to drive it very far upwards due to continuing negative sentiment over the situation in Europe generally, and now Spain specifically.

What can the Swiss do to weaken their currency despite the market sentiment ?

The SNB have already promised to buy foreign currency in unlimited quantities to defend the 1.20 floor, but they could consider using some additional tools in the toolbox to encourage further weakening of the Franc, for instance the introduction of negative interest rates to discourage investors from holding Swiss Francs.

Another factor that may be tempting the market to take a pop at shorting the EUR CHF is the lack of a permanent SNB Chairman ‘in post’, following the departure in ‘less-than-celubrious’ circumstances of the former incumbent Mr Philip Hildebrand. Whilst his replacement ‘acting’ peep Mr. Thomas Jordan has inherited a baptism of fire, defend-the-floor chalice, the lack of a confirmed replacement has created an uncertainty and a vacuum in the market that has introduced the ‘no one at the helm’ perception.

The market is a greedy heartless profit driven machine

Finally the market is just a greedy old heartless profu driven  machine that wants to make money by speculation. They don’t give a hoot if some chocolate, cheese or watch factory in Berne goes belly up because their stuff is way too expensive in the rest of Europe. But if the market sniffs a very real and credible potential long term upward trend, everybody and their brother is going to jump onboard, and the effect will gather momentum faster than a giant snowball rolling down the slopes at Interlaken !

So lets have a few more rumours coming from the SNB about raising the floor, and weakening the Franc further through economic policy. That inertia is what is needed now to overcome the initial resistance that has kepth the EUR CHF pinned to the floor.

The EUR CHF is currently trading at 1.2026 having retraced slightly from the earlier daily high of 1.2034 during the start of the Asian session

Beats me.

One of my readers – Anthony – raises a very interesting point about the SNB’s minimum exchange rate for the Euro Swiss Franc pair.

It’s such a good point in fact that it is worth writing an article about !  Thanks Anthony.

EUR CHF Exchange rate hovering around close to the 1.20 floor as of April 11th 2012

Simply put, why are the SNB dithering around with the Exchange rate hovering within a few pips of the 1.20 CHF per Euro trading limit imposed by the Bank ?

Furthermore, the Swiss National Bank KNEW that there were counter parties out there in the big nasty forex world who they did not have signed up agreements with, to Swap Euros for Swiss Francs at the pre-determined ‘floor breaching’ threshold of 1.20 CHF per Euro.

Now, If I was Thomas Jordan (Vice Chairman and Acting Chairman of the SNB), it might have occurred to me that this represents a potential RISK.

EUR CHF exchange rate risk management

Big banks usually have huge risk management departments.

Heck, even I have a risk management department – It’s called a calculator, and every time I place a trade I ask myself – where is my stop loss, does this represent more that 2% of my trading capital – simples (eeech) !

Okay, so knowing what we now know, that the SNB knew all along, why oh why did the risk management department tucked away in the dusty basement cupboard not send a ticker-tape message, or a telegram, or even (gosh) an email or a text, or a facebook wall message up to Tommy’s glittering top floor Office, warning him that there was an ever so slight possibility that the 1.20 may possibly be breached by some rogue bank in Kazakstan or Timbuktu dumping unwanted Euros for Swiss Francs.

In other words there was, and still is, a possibility that a ‘technical glitch’ can cause the unbreachable to be breached.

Technical Glitch could cause a further breach of the SNB 1.20 exchange rate floor

So if you’ve just moved your long trade EUR CHF stops from 1.1998 to 1.1988 are you now safe ?? Will you sleep soundly knowing that your long 10 lot EUR CHF trade is safe in the hands of the steam driven SNB computer systems ??

Fortunately I never believed that the price of the EUR CHF could not spike below 1.20 even by 10, 20 or 30 pips – I had my stops ‘safely’ tucked away at 1.1900 this time, with a bunch of short hedging trades at ‘secret’ intervals below this level (don’t forget I had weeks of sleepless nights nursing short hedging trades at 100 pip intervals all the way down from 1.25 to 1.00 last year, and I still haven’t caught up on all that lost sleep !!

Now in my former life as an electronics engineer, we had things called ‘buffers’ which take a bunch of data and store it up, then release it to the host recipient of the data at a constant rate. It smoothes out glitches in the rate of incoming data, and helps everything to flow at a constant rate overall.

Now, you know where this is going don’t you ?? Right, – it’s going to end in another ‘recommendation’ to Mr Thomas Jordan – just a bit of ‘free’ advice, on the house, like, gratis.

Now I normally charge $1000 per hour for my consulting fees, BUT, as I said, this advice for the SNB comes totally ** f.r e e ** for today only.

The SNB has said it will defend the CHF 1.20 floor with the utmost determination, but it is quite obvious that they are vulnerable to the technical glitch, as Anthony puts it. So why not create a buffer ? That way if things get a little over-heated the buffer soaks up the garbage coming from the non counter-parties ?

OK so, how to create a buffer ?

Easy, just lift the floor to a technical level of 1.2050 or 1.2100 by spending about another billion Francs, and if the price falls below this level at any time from the moment the markets open in Tokyo to the close in New York, then the SNB has a 100 pip buffer zone to defeat the bear market price spikers by kicking off it’s existing measures that it is using to defend the current floor level.

THAT would absolutely guarantee that the floor would never be breached again.

(I don’t really expect any offers of a job in Zurich as a result of this amazing insight though, as a child of three could probably have worked it out).

OK, so lets all get long on the Euro Swissy – Tommy needs all the help he can get – if enough of us pile in – heck we can raise the floor ourselves – lol.

The SNB Vice Chairman Mr Thomas Jordan has defended last weeks breach of the minimum exchange rate set by the Swiss National Bank for the Euro Swiss Franc, and has today Tuesday April 10th re-affirmed the SNB’s resolve to defend the floor.

In a communique from the Headquarters of the Swiss National Bank, specifically targeted towards news agencies, Mr. Jordan explained that ‘a few individual transactions were observed at a rate below the minimum rate for the EUR CHF pair set by the Bank’ (fat lot of use that is if you’ve just lost your shirt after relying on the previous many promises that this would not happen).

He then goes on to explain why this happened, saying that a particular series of events outside of the Banks control caused it to happen – nothing like passing the buck after the event eh Mr Jordan ?

So what are the technicalities as to why the rate fell below the 1.20 level ?

Tommy then goes on to wriggle and squirm his way around the basic fact that the SNB has agreements with counter parties worldwide to swap Euros for Francs in unlimited quantities. However there are some counter parties that obviously have sufficient clout to move the market big style that the SNB does not have counter party agreements with.

Hmmm… so the floor is the floor except when it can’t be defended because some of the bad guys that do not want to get into bed with the SNB decide to dump some unwanted Euros ??

Oh dear, this does not look too good in the eyes of the long EUR CHF community that I represent.

Will the EUR CHF 1.20 floor hold going forwards ?

The concern is that although the floor has held for more than six months, now that the market has poked through the 1.20 level, it will possibly be back for more, and this time it won’t stop. Big as it may be I doubt if the Swiss National Bank can take on the whole world if everyone and their brother decide that they want to put their moolah into safe Swiss Francs.

There’s also a neat little phrase that is slipped innocuously into the speech – ‘segmented market’. This is supposed to mean that whilst some banks were offering a EUR CHF rate of 1.1990, this was not ‘best rate’, and at no time did the ‘best rate’ fall below 1.20. Well my broker certainly measured my long EUR CHF trades’ drawdown based on 1.1990. What the heck’s the use of Fred’s bank up the road offering 1.20 if all my open long EUR CHF trades are gobbling up my margin at 1.1990 ??

Talk about a baptism of fire for the acting head of the Bank – Mr TJ. Makes me wonder whether Tommy’s predecessor – Mr Philip Hildebrand didn’t deliberately get his wife to dodgy deal all those 500K USD transactions just to get himself sacked, and therefore off the hook for all the flack that’s flying round now !! Nice one Phil – you and you’re very rich Mrs are probably sunning yourself on the sun deck of your Sunseeker Motor Yacht in some posh Caribbean Harbour.

Anyhow, it looks as if the SNB are going to fudge, defend and generally avoid taking any responsibility for last week’s fiasco and nonsense, so we must all revert to standing by our beds, and monitoring the situation going forwards.

At least we have the closing words of our favourite Bank Vice Chairman to re-assure us as we head into the unknown – that the SNB still defends the minimum exchange rate witht the utmost determination, quote :-

‘The Swiss franc is still overvalued and represents a substantial challenge for the Swiss economy. The SNB continues to expect that the Swiss franc will weaken. Should the economic outlook and the risk of deflation so require, the SNB stands ready to take further measures at any time’.

Note the implication that the Franc should weaken further over time.

Anybody for long trades on the EUR CHF ?

Actually, if you had put a standard contract (1 lot) trade on at 1.1990 with a TP of 1.2028 reached earlier today, you would have had a nice 38 pip profit worth approximately USD 425 – not bad going for a weekend carry trade.

EUR CHF Floor of 1.20 CHF per Euro Breached

The unthinkable happened Yesterday April 5th at exactly 10.41 BST.

I think someone must have fallen asleep on the ‘defend the floor’ helpdesk at the SNB headquarters earlier !

In fact they must have been stone deaf not to hear the Klaxons wailing as the price action crashed through ‘the floor that was made out of sawdust’

The EUR CHF pair breached the SNB Floor of CHF 1.20 per Euro by a massive 10 pips.

EUR CHF Pair traded briefly at 1.1990

According to one of the main Interbank Networks (EBS) the EUR CHF pair briefly traded at 1.1990.

Looking at the chart, it appears that the breach was indeed very brief, as the price bounced up to 1.2016 on the next 1 minute candle.

However, this is a very serious breach, and will have taken out many long EUR CHF traders who placed their trust in the SNB, and set their long trade stop losses a couple of pips below the 1.20 lower limit.

In my opinion the credibility of the Swiss National Bank is now completely destroyed, and they have been left with egg all over their faces over this incident

Let’s just have a recap on what the Swiss National Bank actually stated and re-stated  IN WRITING on many separate occasions :-

This is what Mr Philip Hildebrand said on September 6th 2011

The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate

below one Swiss franc twenty. The SNB will enforce this minimum rate with the utmost determination. It is prepared to purchase foreign exchange in unlimited quantities. Even

at a rate of one Swiss franc twenty per euro, our currency is still at a high level. It should continue to weaken over time. If the economic outlook and deflationary risks demand

it, the SNB will take further measures.

And this is what Mr Thomas Jordan said on February 7th 2012 (he goes even further)

Given this difficult environment, the SNB remains firmly committed to defending the minimum exchange rate of CHF 1.20 per euro. This commitment applies at any time, from the moment the market opens in Sydney on Monday to when it closes in New York on Friday. The SNB will not tolerate any trading below the minimum rate in the relevant interbank market.

To enforce this policy, it is prepared to buy foreign currency in unlimited quantities if necessary. Moreover, it stands ready to take further measures if the economic outlook and the risk of deflation so require.

A couple of days ago I posted an open letter to Mr Thomas Jordan asking if he would consider raising the floor, as we have not seen any noticeable weakening of the Swiss Franc since the floor was set back in September last year. I haven’t heard back from Mr. Jordan yet (maybe the reply went in the spam filter – lol).

Well Mr. Jordan you DID tolerate trading below your not-so-well defended floor of 1.20.

Not only did you tolerate it, you tolerated a full 10 pips below it.

What’s up with your computer systems ? Do they have a hatch on the side where you shovel in coal Sir ??

I tell you what – I’ve got an old Sinclair ZX Spectrum that I just listed on Ebay – why don’t you bid 50 bucks or more on it, and use it to place your next 18 billion ‘buy Euros now’ trade on the Interbank – It’ll certainly perform faster than your own ‘defend the floor’ systems.

It seems likely that a number of large players hit their automated stops below 1.30, as this is the cliff edge on the 1 minute chart where the price jerked down to the 1.1990, and this would have dumped shedloads of Euros onto the market all within a few seconds So, as I write, the EUR CHF is trading at 1.2018 ahead of the weeks close for the Easter holiday period. Let’s see what happens as liquidity thins out towards the close of the markets later on today.

Join the Forum discussion on this post

Dear Mr. Jordan,

I am writing on behalf of all the long suffering Forex Traders who have patiently held on to our buy and hold EUR CHF trades from the heady days when the exchange rate was up in the dizzy 1.49 – 1.50 range.

We have followed it down from there to the dark and catastrophic days of the various psychological levels of 1.40, 1.30, 1.20, 1.10 and finally 1.00 exchange rate of September 2011. Some of us lost our entire life savings because we did not believe that your currency could appreciate so much and so rapidly against the Euro.

We could have warned you that your country’s economy, especially your export led industries, would suffer serious consequences from such a massive appreciation of your currency against the Euro, but nobody was listening to us, or at least not listening hard enough !

Since your esteemed predecessor Mr. Philip Hildebrand established the floor in the EUR CHF exchange rate at 1.2000, the remaining, still breathing, stalwart long EUR CHF traders breathed a huge collective sigh of relief that at last, your country was finally prepared to take some drastic action to arrest the seemingly unstoppable appreciation of the Swiss Franc against the Euro.

I understand from financial statements published on your website that you spent 18 Billion Swiss Francs in order to jack up and keep the EUR CHF rate up to 1.20 – a small price to pay in order to achieve such much needed economic benefits n’est ce pas ?

We appreciate the fact that you have steadfastly and firmly defended this rate, promising to ‘buy foreign currency in unlimited quantities’ if necessary, and this has given both your country and the long EUR CHF trading community some much needed stability, for which we are very grateful.

However, we were told that even at this level, the Swiss Franc remains overvalued, and that it should weaken further over time.

Well, Mr. Jordan, I certainly agree with that sentiment, but there doesn’t yet seem to be any sign of it happening. What does further actually mean ?? In what time frame ??

We stand ready to buy Euros ourselves (perhaps not in quite the unlimited quantities that you do !) and help to further weaken your currency, but we could really do with a helping hand. As I write, on Friday March 30th 2012, with the closure of the New York Market a mere few moments ago, the current EUR CHF exchange rate is only a mere 37 pips above your well defended ‘floor’.

This is very disappointing Mr. Jordan, after 6 months of patiently waiting for the start of some meaningful long term uptrend, that would signal the start of that promised ‘further weakening’ of your country’s currency, that your bank has alluded to.

Some of your business leaders apparently share the same opinion as I and my trader community friends, as they have lobbied for you raise the level of the EUR CHF floor to 1.25 or even 1.30.

That would indeed be a much awaited fillip, and would bring some cheer to even the grimmest faces amongst the EUR CHF buy and hold trading community.

So, if you could see your way to helping us out by considering raising the EUR CHF floor from the current 1.20 to 1.25 or 1.30 we would deem it a great favour, that would allow us to further help your economy, by joining you in strengthening the Euro, and weakening the Swiss Franc.

 I do hope that you will give this matter some consideration.

Yours sincerely,

Malcolm Waters

Owner and Founder

www.forexsmarter.com

on behalf of the worldwide Forex Trading Community

 The Swiss National Bank (SNB) have today, February 9th 2012, formally announced that they are delaying the issue of their new Swiss Franc bank note collection, for about 12 months.

This is how the bank made the declaration :-

Issue of new banknote series delayed

Unexpected technical problems were encountered in an early production stage of the new Swiss National Bank’s banknote series, which has led to a delay of at least one year in the issue of this new series. The SNB will announce the issue date as soon as the first banknote denomination is ready for distribution.

Since the current banknotes continue to offer a high standard of security and can be produced in sufficient quantities, the supply of high-quality banknotes to the economy is guaranteed at all times. Until recently, the SNB expected that the first note of the new series could be issued towards the end of 2012.

What they’re saying here is that there are currently enough Swiss Francs floating around for people to buy, thus hurting their exports, and they DO NOT want to throw in any more just now, that greedy speculators may buy in large quantities, and increase the strength of the Franc against the Euro !!

Also, I wonder if this is so they can recall them all from the printers and stamp this on them in large red letters :-

Don’t you dare exchange this 1 Swiss Franc Bank Note for less than 0.8333 Euros  – lol

 Or should that be 0.7412 Euros to 1 Swiss Franc (work out the Math)     

I usually get several emails per week from the Swiss National bank (SNB), as a registered user of their website.

These usually consist of such riveting bed time reading as the following regular weekly or monthly titles :-

• Money market debt register claims of the Swiss Confederation Results
• Important monetary policy data for the week of blah blah blah
• Public bonds of the Swiss confederation – new bond issues

These usually reach me via the snb.ch RSS feed, but I also usually get a personal email from the Bank (makes me feel kind of special and important !)

Anyhow, one that landed in my inbox at 11.15 GMT this morning caught my eye, as I had NOT seen it on the RSS feed.

With a certain amount of trepidation (like a naughty schoolboy who had just defaced the Rugby team notice board) I opened it up with a certain sense of intrigue.

It unassumingly announced :-

’1 new document(s) since Feb 7th 11.21 CET’

followed by the following which was a hyperlink :-

’2012 – Swiss monetary policy in uncertain times’

Inviting me to click on to unravel the full mystery. As I read on, I wasn’t disappointed.

It was from Thomas Jordan, the acting chief of the SNB, and it opened by describing how Switzerland has been suffering the effects of the negative developments in the global economy.

How the eurozone sovereign debt crisis had led to a massive appreciation of the Swiss franc which posed an acute threat to the Swiss economy and carried the risk of deflationary developments.

And so on it went, but here’s the fascinating part of it. Not content with just re-affirming the minimum exchange rate of 1.20 Swiss Francs per Euro, there were three extremely strong and forceful statements, starting with :-

‘the SNB remains firmly committed to defending the minimum exchange rate of CHF 1.20 per euro’

and going on with :-

‘This commitment applies at any time, from the moment the market opens in Sydney on Monday to when it closes in New York on Friday’

So, for the first time ever, the SNB have now given a cast iron guarantee that they won’t allow the rate to fall below 1.20 for a single minute of any day that the markets are open – nice one Tommy J  !!

And the grand finale (including the threat of unspecified ‘further measures’) :-

The SNB will not tolerate any trading below the minimum rate in the relevant interbank market. To enforce this policy, it is prepared to buy foreign currency in unlimited quantities if necessary. Moreover, it stands ready to take further measures if the economic outlook and the risk of deflation so require.

Whilst we’re not in the business of giving financial advice but with the EUR CHF currently trading at 1.2085, ……..  we’re only a few small pips above the minimum exchange rate !

So, it’s looking like the 1.20 floor may hold for a while. And therefore the price can only bump along the bottom, or ….. go up. Good Trading everyone.

The new temporary chief of the SNB made comments in a speech today that appears to re-affirm the Swiss intention to maintain the minimum exchange rate floor that was set at 1.20 back in September 2011. 

He goes on to state that the exchange rate floor is the most effective way of protecting the Swiss economy.

In his acting interim position as head honcho at the Swiss National Bank, he clearly does not see a massive inflation risk in Switzerland or elsewhere in Europe due to the current monetary policy thats provides the financial markets with plenty of liquidity.

Here is an extract from his speech (also note the reference to friction with the Americans over the shady and dodgy world of tax affairs between the two countries) :-

        “I don’t see a huge inflation risk in Switzerland, the U.S., nor Europe,” Thomas Jordan said at an event of the Swiss-American Chamber of Commerce in Geneva.

        He also said that the SNB’s use of a floor on how low it will allow the euro to trade against the franc was the most effective instrument the bank had to protect the Swiss currency and the economy.

        The meeting comes as Swiss banks are under pressure from U.S. authorities over tax issues. Jordan said that the relations between the two countries “weren’t the easiest at the moment.”

        Swiss companies’ trading with Asia is likely to become more important in the future and this may well be reflected in the bank’s reserve currencies, he said.

So, he rounds off his little speech with a clear and thinly veiled threat to the Feds, that could be interpreted as ‘hey, if you don’t stop messing around prying into all the hordes of cash from your citizens’ dodgy dealings, we’re going to bin you in favour of Asian money. Whilst he admits to a bit of a frosty financial relationship with the American Tax Authorities  just now, those comments can hardly have helped !

Anyhow, meanwhile the EUR CHF rose to the dizzying heights of a recent new 10 day high of 1.2095 during the London session, and is currently showing signs of being in a nice up-channel, as you can see from the 4 hour chart below.