Swiss Bank Intervention Time

A few weeks ago we discussed the record strength of the CHF versus the EUR and noted that a currency intervention by the Swiss Bank was only a matter of time. Sure enough, see below - all the grace of a drunk, frontrunning HFT trader in a non-child order algo world.

Comments

[Crummy]

Maybe Tron wanted something to stand at the edge of to practice his yodel?

[Jim in MN]

How do ya handle a drunken trader?

Swap the colors on his heatmap and his algo fader

Way hey and up VWAP rises

Early in the mornin'

[Missing_Link]

+1

[faustian bargain]

+ARRRRR

[Mr Lennon Hendrix]

Yo ho!  Raise the masts; it be swashbucklin' time fer ol' Black Bart an' the rest of the Scull an' Bones crew!

[Modus]

this wont be the last one, stay long this sucker :)

[gmak]

Looks iike they come in around 1.4150ish. There's 2 'cents' for EUR to drift lower again. heh.

[Dixie Normous]

So for all the currency traders here, what happens if this doesn't work?

[if]

Depends on what you mean by "work".  I doubt the SNB wants to change the trend as that would have macro effects.  By slowing it down they give physical players time to hedge.  Most central banks prefer to talk the currency up or down but the recent data out of CH has been very strong.

[Dixie Normous]

Thanks.

[hedgeless_horseman]

Switzerland will take all the Euros they have accumulated and buy NDMs (New Deutsch Marks) to lock in the loss, then raise taxes.

Alternatively, they can start charging the Japanese more to launder those "fake" U.S. treasury bonds via Italy, or somehow be able to export an assload of clocks, watches, and pocket knives at much higher prices.

In summary, they really hope it works, because gone are the days when the Swiss Franc was an actual reserve currency.

[faustian bargain]

Is this why gold goosed up to 1124?

[Mr Lennon Hendrix]

"Swiss Bank Intervention Time".

Or as I like to think of it, NAP TIME!

"Vell Hanz, all dis intervention has made me tierd.  I vill be back tomorro, vit more chocolates."  "Oh yes pleaz, bring more chocolates!"  "I love chocolates!"  "Me too, I love chocolates!"

[Alexandra Hamilton]

Lindt & Sprüngli is just across the street from the Swiss (National) Bank.

http://business.spruengli.ch/filialen.php?pid=0ff5528726f428a84ca7bac75d...

[godzila]

Now that was a *massive* move... 1.4150 to 1.44 in 2-3 mins... wonder how much they "spent" on that. Definitely a good entry point ;)

[ConfederateH]

Switzerland is learning first hand the hard lesson of what it means to deviate from the path set by the dollar.  As long as the dollar is the worlds reserve currency and the globalized economy still survives, every country trading in the US led globalized economy is forced to follow the path of the dollar.

Deviate from the path set by the one true fiat currency, and ye shall suffer the consequences.

In the short term, Switzerland is forced to try to depreciate as fast as the Euro and the Dollar.  The Swiss economy is highly dependent on the global economy, and is too small to effect the downward trend.  Therefore the Swiss are forced to trash their own currency in order to keep pace in the race to the bottom.

Too bad the SNB is too brainwashed to realize that they should be buying gold.  Lots of it. That way they would accelerate the collapse of the dollar-reserve currency hyperpower while accumulating gold that will raise the wealth of the entire country when the dollar finally bites the dust.

[ConfederateH]

This is why China pegged the renimbi to the dollar.  Exchange rate stability allowed business there to thrive while passing all exchange rate risk on to the government.  Isn't this in the end the same kind of government assumption of risk as TBTF?

Switzerland, just as in WWII, has no choice but to go with the flow and try to come out the otherside as best they can.

[SWRichmond]

This things are done "big", and overtly, for a very good reason: to make a statement, as a warning.

[Mr Lennon Hendrix]

Cryptic, so artistic, and as always, on point.

[mark456]

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