The US dollar recorded its high for the year
against the Swiss franc on January 14 near CHF1.0240. It closed that
day a little below CHF1.0190. The next day the Swiss National Bank
surprised the world by lifting its cap against the euro. The dollar
plunged to nearly CHF0.7400.
It has taken increased prospects of a Fed rate
hike, negative 75 bp on sight deposits at the SNB, and the prospect of
more, if the European Central Bank takes additional unorthodox monetary
measures in early December as many expect, to allow the dollar to fully recoup
that one day of losses. The dollar reached CHF1.0226, according
to Bloomberg yesterday.
Since mid-October, when this leg of the
dollar's advance began, the greenback has risen about 7.75% against the franc.
Speculators in the futures market have increased their gross short franc
position three-fold over this period to 34.3k contracts. This is the
largest speculative gross short franc position since May 2013, which itself was
the largest since 2007.
The SNB meets again on December 10. The 3-month
LIBOR range is set between -25 bp and -1.25 bp. Talk of a 20 bp cut in
the ECB's deposit rate or more could elicit a response by the SNB. The
market is discounting this prospect. Given the political tensions,
many are surprised by the muted reaction by the Swiss franc. This too may
be seen as a sign of the extent of the bearish sentiment.
Technical readings are stretched, but the MACDs
and RSI do not appear to be rolling over yet. It may take a break of the
CHF1.0080-CHF1.0110 to pressure the late shorts. The next major
upside target is near CHF1.05.
Great Graphic: Dollar Recoups January Loss Against the Swiss Franc
Reviewed by Marc Chandler
on
November 24, 2015
Rating:
Reviewed by Marc Chandler
on
November 24, 2015
Rating:
