USDCHF In Free Fall, Approaches Parity As Hungary Cries Uncle, The Global QE Monster Stirs, And LBMA Provisionally Nukes Gold
Another ridiculous market reaction following the ADP read today, when the AUDJPY initially dropped, only to see every deranged Japanese housewife, and anyone else with an FX account plough into it taking full advantage of 50x+ leverage to spook remaining weak short hands out. The catalyst: good news is good news, bad news is better news, as, just like Bank of America which just threw in the towel (more in a post momentarily), any incremental economic snapshot now means either more QE by the Fed or more QE by the Fed (and other CBs). We are back to the regime where dollar weakness is good for risk (especially beta>5.0 risk, meaning all the empty chatterboxes whose only strategy is to lever up on beta and pray will be out in full force on CNBC today). Incidentally, just as we expected, and right on cue, the Hungarian central bank said that the surging CHF poses "risks from the aspect of Hungarian economy's growth prospects, and that the weakening HUFCHF is causing higher than expected loan losses in bank sector." Define zero sum.
Of course, all this means is that fundamentals are pushed even further into the background, as the only thing that matters is which global bank can print bigger, faster, more. To wit: the USDCHF just cut through the bidside like butter, reaching the lowest levels seen since December 2009. So yes - 24 hours in which the US can gloat, then everyone will move from one side of the boat to the other, as the SNB finally says enough. Obviously, that will also be a risk positive, as yet another bank joins the debasement parade.
And yes, all those expecting this latest round of imminent central bank intervention (which is the only thing that matters anymore) to push gold lower, feel free to wait. Which is precisely why the LBMA decided to throw a gentle little intervention party 5 minutes ago in which it took away the entire bid side in gold. Enjoy the chart below of a perfectly and orderly JPM take down.