Post Tagged with: "Switzerland"
Additional US dollar liquidity-providing operations over year-end
A statement by the Bank of England on market liquidity to be provided in co-ordination with other major international central banks
Chart of the Day: Guess what the best performing asset market is
Here is a chart of the relative performance of various asset classes over the past year. One asset class outperforms the others… by a wide margin
SNB Pledges New Managed Float to the Euro
Morning dominated by SNB’s decision to target EUR/CHF at 1.20; European stocks marginally higher. German August orders slumped -2.8%, first drop since March; US service-sector ISM key report today. In the EM space, China’s economic growth may ease to below 9% in 2012; RBA turns neutral
Eight thoughts at the end of a tumultuous Week
This has been an extremely tumultuous week throughout the capital and commodity markets. August itself has been a cruel month. The German stock market has lost around a quarter of its value. A marked slow down in the US and Europe in Q2 has given rise double dip fears in the former and compounding difficulty achieving deficit targets. There are a number of take-aways for investors from this week’s developments
The yen is a safe haven as Japan is the world’s largest creditor
The yen is a safe haven. That assertion seems so obvious, that why it is the case is rarely explored. It does not seem to be a function, as some suggest, of its trade surplus, but rather its position as a net international investment surplus country. That means that Japanese investors own more foreign assets than foreign investors own of Japanese assets. In fact, Japan is the world’s largest creditor. Last year, it was in surplus by over $3 trillion. China is the world’s second largest creditor at about $2.2 trillion and Germany is in third place with a $1.2 trillion surplus. Next are Saudi Arabia and Switzerland
Underwhelming Policy Response Continues
Markets stable but tone remains fragile. SNB expanded its sight deposit target; no EUR/CHF peg. BoE’s decision to stay on hold was unanimous. New measures announced by China boost CNY internationalization and integration with
Pegs, Pomp, and Direct Democracy
In characteristic form, the currency traders and those who trade in what is dubbed “financial news” woke up last week and discovered, à la Rip Van Winkle, that the Swiss franc was a haven currency charging higher. Never you mind that it has been on a steady carabiner-and-rope-assisted climb for well over a year. The experts missed all the action and profit of the ascent until the flag was nearly planted at the summit – a sure sign of an interim top
There are five key events for investors this week
The first is the size of the ECB bond purchases. Second, the Franco-German summit tomorrow attracts attention. Third, the market continues to pare long Swiss franc positions with the local press suggesting the SNB and government may take new measures. Fourth, the minutes from the BOE’s MPC meeting form earlier this month will be released on Wednesday. Fifth, of this week’s slew of US economic data, the CPI may be the most important
Three Thoughts for Friday
The past two weeks have seen large disruptions in the global capital markets and various policy responses. Market participants are having a difficult time getting a handle on these developments. There are three things investors should consider before the weekend: 1) German-French meeting next week is suggestive of a new initiative, 2) FOMC decision to keep rates low for 2 years may be tantamount to a type of QE and 3) while a peg of the Swiss franc seems to be a non-starter, officials have succeeded in breaking the powerful one-way momentum
SNB takes action against strong CHF
US growth concerns and downgrade risk remain in play after budget deal. Euro zone periphery remains under pressure as ECB meets Thursday. SNB takes action against strong CHF; spike in EUR/CHF offers good entry point to go long
Swiss Franc to Parity with the Euro – What are the Odds?
It is difficult for companies to cope with the competitive implications of the persistent strength of the Swiss franc. By the OECD calculations, the Swiss franc is the most over-valued currency in its universe near 45% over -valued against the dollar and 37.5% over-valued against the euro. The more simple Big Mac calculations, put the over-valuation against the US dollar at almost 115% and 63% over-valued against the euro
How to Think about Currency Intervention Risks
Officials from Japan and Switzerland have stepped up their rhetoric protesting the price action that has propelled their respective currencies sharply higher. Contrary to market anxiety the risk of intervention remains low and lower for the SNB than the