Some interesting currency moves today

[Wd40]

http://www.bloomberg.com/news/2015-01-0 ... ncies.html

EUR expected to hit parity with USD in 2 years.

[Wd40]

http://www.bloomberg.com/news/2015-01-0 ... ncies.html

EUR expected to hit parity with USD in 2 years.

Another nice interview:
http://www.bloomberg.com/video/pound-to ... DA0_w.html

[Wd40]

http://www.bloomberg.com/news/2015-01-0 ... ncies.html

EUR expected to hit parity with USD in 2 years.

Another nice interview:
http://www.bloomberg.com/video/pound-to ... DA0_w.html

[JR8]

And the Swiss peg is broken!!!

-----
'Markets were back in the red by Thursday lunchtime, erasing earlier gains after a surprise announcement by the Swiss central bank.

The FTSE 100, which rebounded to an intraday high of 6,472.91 early on, was down 0.6% at 6,349 by midday after Switzerland scrapping the franc’s minimum exchange rate against the euro and lowered interest rates.

“The Swiss are known for their neutrality, but today’s move by the Swiss National Bank is far from neutral,” said analyst David Madden from IG.

“The sudden abandonment of the floor by the Swiss central bank has sent the markets into a tailspin. Equity markets have been shaken out by the Swiss move, and dealers are seeking the safety of the US dollar,” he said.'
-----
http://www.digitallook.com/news/market- ... 41625.html

[Wd40]

The net impact on other currencies seems to be of USD weakening against most currencies and EUR weakening against the USD.

This is going to absolutely smash Credit Suisse and UBS shares. Both have significant business outside Switzerland and report their earnings in CHF.

If 2014 was a year of Oil related turmoil. 2015 is going to be a year of currency related turmoils.

[JR8]

This is going to absolutely smash Credit Suisse and UBS shares. Both have significant business outside Switzerland and report their earnings in CHF.

If 2014 was a year of Oil related turmoil. 2015 is going to be a year of currency related turmoils.

Roughly 10% all around, those banks and the index.
Both the names have major business outside of the euro too, probably a majority?
I see the drop as more of a short term trauma, let's see what happens in the longer term. The Swiss aren't stupid (at all) they did this with their heads very much screwed on.

p.s. You've got to laugh, that's a 'money where the mouth is' two fingers to Merkel et al.

[JR8]

'“The SNB must have a very strong inclination that the European Central Bank is about to begin a large scale quantitative easing program which would act to depreciate the euro and make a defence of the Swiss franc peg impossible,” said analyst Jasper Lawler of CMC Markets.

“This is the strongest signal yet that QE from the ECB is on the way so while equities are lower for now on the possible fallout, that may not last long on the prospect of a fresh bout of liquidity from the ECB which would boost risk-taking."'
http://www.digitallook.com/news/interna ... 41611.html

[Wd40]

They have reduced interest rates to -0.75

What does that mean to the Swiss people? Keep deposit in the bank and you need to pay them money to have that privilege. What about lending rates? Interesting world we are living in

[JR8]

There have been negative rates in other countries. It seems like a last ditch attempt to force domestic consumers to spend.

In this case the Swiss are acting to ensure that they are not the target of euros seeking a home to deposit themselves.

I.e. You can have the relative security of parking your broken-EU funds with us, but you will have to pay for the privilege.... bwahaha...

I wonder what vengeance the Eurocrats are dreaming up this morning, since they tolerate no deserters.

Go Swissie!

[Wd40]

Malaysia called as the undisputed loser of Asia:

http://www.bloomberg.com/news/2015-01-1 ... -loom.html

[Primrose Hill]

QE QE

[JR8]

QE QE

Expected from the ECB next week. However, watch them royale-ly eff it up.

There won't be surprise, there won't be 'shock and awe'. Instead there'll be some fudged miserly half-measure. Less than the market thought the lowest possible plan. The markets will be totally underwhelmed and sink, only making matters worse still.

[Wd40]

What the Swiss bank did has helped the EU guys get what they wanted i.e. a weaker currency. The US too is firm on rate hike which will help the EUR go down. If EU somehow manages to devalue its currency and start growing again it helps the rest of the world. So it looks like everyone is happy.



All eyes on China now. They have the means and the power to do some massive easing like devalue their Yuan or cut rates even more.

[JR8]

What the Swiss bank did has helped the EU guys get what they wanted i.e. a weaker currency. ... So it looks like everyone is happy.

I like your positive spin. The Swiss just showed up the euro for precisely what it is, and I expect Berlin/Brussels would like to send their tanks down the road to Zurich, (a la Athens), just this time they have nil jurisdiction... bwahahaha!

And meanwhile China... and then of course what's going to blow-up next within the EU.



p.s. beyond parody. Here's the Daily Mail headline:
'- Swiss central bank shocks world markets by unleashing exchange rate
- Pound sees further rises against euro but drops against Swiss franc
- Bonus for holidaymakers going to Spain, Greece and France but not for skiers heading to Swiss Alps
- Fears the soaring Swiss currency might increase chocolate prices'
www.dailymail.co.uk/news/article-291173 ... aders.html

[Wd40]

Apparently the SNB move has bankrupted a few forex brokers and also some businesses in Poland and Hungary who have taken loans in Swiss francs. Next week we may have a few more skeletons coming out of the closet