From Reuters.com

Traders cited talk of intervention by the Swiss National Bank to lift the euro against the franc. They also said there was also some SNB activity in the dollar/Swiss franc pair.

The SNB was not immediately available for comment.

The euro fell to record lows below 1.4150 francs EURCHF= but surged to session highs at 1.4410 right after. It was last at 1.4329, up 0.6 percent.

The dollar rose against the Swiss franc to 1.0561 francs CHF

The full article can be read on reuters.com

We finally got that intervention from the SNB that we were looking for. It looks like they are trying to keep EURCHF above the 1.4300 mark. They will be able to keep it above that level for a while, but if history is any indication the intervention from the SNB never lasts in the long run. You can read more about my thoughts on the SNB intervention here.

Seeing as EURCHF now sits at its lowest levels of all time, will the Swiss National Bank be intervening soon? In their last monetary policy statement, they pulled back their intervention language, but did not rule it out. They were on the lookout for “excessive appreciation” of the CHF, especially against the euro. I don’t know what they consider to be excessive, but we are surely headed in that direction. Based on his speech today, it looks as if the Chairman of the SNB is calling for more intervention from other central banks. And he also stated that price stability be their primary concern (keep in mind the primary concern of the European Central Bank is inflation).

Anyone considering trading any CHF cross should do so with extreme caution, if at all. And anyone currently in a CHF trade should reevaluate their position given the high risk of intervention. Of course if you are short CHF it would move in your favor should the SNB decide to intervene. EURCHF currently sits at 1.4269.

The euro is definitely deserving of its nickname of the anti-dollar. The market never seems to favor both at the same time. So the question you must ask yourself as well is: Is time to sell the dollar? To do this I will look at USDCHF as it correlates to EURUSD (EURUSD and USDCHF have a historically strong negative correlation). Now, I am not suggesting a correlated trade, but rather looking at a correlated currency pair to give you a different perspective.

Take a look at EURUSD on a H1 timeframe. Originally I saw two consecutively broken triangles with momentum moving up, so I looked to USDCHF to see if I could see a similar movement. This confirmed what I saw in EURUSD with one exception; USDCHF was traveling in a downward channel and was nearing the bottom. So I looked back to EURUSD and saw this channel as well and it was nearing the top of its channel.

Looking at USDCHF told me two important things. First, that EURUSD was moving in a channel, and that this was not an optimal time to buy. Optimally you should wait until EURUSD is at the top of its channel (USDCHF will be at the bottom of its channel) before you buy it. This gives you a better price and puts EURUSD closer to support giving you a higher potential for profit.

In the chart below I have marked what I originally saw in red, and what USDCHF helped me see in blue.

Traders often times look to correlations in order to attempt to make some kind of hedge that will guarantee profit. This is not the purpose of studying correlations. What correlations do is give you a different perspective on a currency pair that will show you what you didn’t see in the original pair. Remember that without potential for loss there is not potential for profit.

Last Friday proved to be a strong showing for the US unemployment data, giving a boost to risk appetite and taking strength out of the dollar. This week, on the other hand, has little market moving data set to be released. Expect the first half of the week to move in a technical fashion since any important data will not be released until Thursday.

Monday

No important data.

Tuesday

No important data.

Wednesday

0:30 GMT

The fear for AUD is that they are in a housing bubble much like the US. However the home loan data is far too variable to be a stable predictor for the housing market, don’t expect a reaction to its release

9:30 GMT

The manufacturing production data for GBP is unlikely to have an impact either, this data is mainly indicative of a slowing economy but does not do well at signaling a recovery.

20:00 GMT

The interest rate for NZD is not expected to change, not even for a while. New Zealand and Australia may be close to each other but their economies are worlds apart. Don’t look for a recovery out of New Zealand for some time.

Thursday

0:30 GMT

The Australian employment data has been surprising to the upside, and I don’t expect that to change for this release. AUD has been strong so look for this data to continue that strength.

13:00 GMT

If there is a market event that could challenge the current risk appetite in the market it is the CHF interest rate statement. If the Swiss Bank further strengthens their intervention stance then the market will react adversely to risk, but if they shy further away from intervention citing stronger economic conditions then look for the risky currencies to gain strength.

Friday

12:00 GMT

The Canadian economy has been surprisingly resilient. The Employment data will surprise as positive for CAD if it surprises at all.

13:30 GMT

The US retail data may be coming in too late in the week to have any real impact, but it has been strong and if we are in recovery mode data like this should be surprisingly positive.

Selected Excerpt

USDCAD is about to break out of the symmetrical triangle that has developed on the one hour chart. Look for the break to occur somewhere around 1.0695. After the break, look for the price to enter the resistance zones around 1.0725 and 1.0745. Expect some consolidation or even a range between the two zones, but eventually look for the price to break 1.0745 and head up towards 1.0810. When there, watch out for more consolidation and then a break towards 1.0855.

For the full article, please view the PDF here.

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