Let me for a minute play the devil's advocate here. As Soros used to say, Chinese were providing floor under EURO and when it breached 1.20 last year, they ramped up buying and now also every now and they come and buy euro at lower levels. Now, they have got another powerful ally with them - SNB. Euro might rally just based on the actions of these 2 super-weights or at least not fall that quickly. However as from today's action its clear that usdchf will bear the brunt of the action rather than eurusd.
what if Germany would say it leaves euro tomorrow? SNB will hold large quantities of euros, which will lose in value terribly. its another multi billion dollar/euro transfer of wealth to few strong hands. SNB is essentially acting like a toxic waste storage. anyone wants to dump shitty euro? no problem, snb is happy to buy it from you
I think you need to be a bit careful. Yes, SNB and China are willing to buy a lot of euros agreed. But dont you think that this fact will make hfs and other large speculators to go a bit slow on dumping euro since their immediate 'sells' might not show them a good profit - and as a result they might be reluctant to sell euro in very large amount. Another factors is QE3 coming and leading to free money everywhere - dollar dumping more than euro. So eurousd goes up - i am not saying it is going up - i am just trying to think both sides. Everything said and done, with CHF gone as one more safe currency to park your cash in, it is going to make gold go up even higher. This is something I am certain of.
Good laugh here. Actually, Switzerland highly depends on the EU. Switzerland's main trading partner is the EU. On the other hand, Switzerland is currently the fourth largest trading partner of the EU. Trade figures in 2008 show â¬80 billion in imports and â¬97.6 billion in exports. In terms of imports, Switzerland was the EU's 5th most important trading partner in 2008, after the US, China, Russia and Norway. Regarding exports, Switzerland was the 3rd after the US and Russia in the same period.
i agree that gold should be the winner in current situation. but i doubt that china is that interested in investments in eurozone. Long term, Europe will be filled with older and older, unproductive europeans and rising millions of muslims, with very little skills besides reproduction, making babies like crazy. China position would be better when euro and $ will slide, so they can purchase more of western land. the only thing which probably holds value for Chinese in America and in Europe is their land and natural resources. They can produce everything by themselves. Real estate, roads, bridges are just a bunch of cheap bricks and cheap labour, they can build huge amounts of these with chinese hands. Western culture and catholic churches, museums also does not represent any practical economic value (besides tourism). i guess vatican freaks out seeing much larger economic power (Asia)ready to take over the West, Roman system of finance, law, culture, and i hope spirituality. sorry for too long post and a bit off topic.
I made money on this move, but it still burns my arse, clearly this is not a free market, I bet they phoned up their buddies at a few banks and warned them. "You know in the name of financial stability" Can't have UBS or CS blowing up now can we, and the wankers on the desk didn't trade on it no, of course not. Makes me want to puke, maybe anonymous and max keiser are right, centrally planned economy != Freedom
You're 100% correct, Switzerland depends on EU. Thats why i've said Swiss National Bank, not the whole Switzerland. of course, economies are interconnected. The bad thing with Switzerland, Europe and U.S. is the high % of population employed in financial sector, which creates and produces NOTHING. In Asia, population is working to produce some real things and thats how wealth and prosperity is created. The western world just prints worthless currencies and imports goods and oil. It cannot go ad infinitum. Actually, only 9% of Swiss GDP comes from banking and it does not waste trillions on military and interest on debt, so Swiss will be in much better shape than other European countries for many years ahead. Fixed exch. rate won't change that.
You don't seem to understand - the SNB can print as many CHF as it wants, therefore it can provide infinite CHF supply at 1.20. If the SNB doesn't want the CHF over 1.20, it won't go over that level. A country cannot make its own currency go up, but it can certainly make it go down. The central bank does, after all, have the ability to literally print as much of the currency as they require.
which as an extension also means that EURCHF should be bought at these levels for scalps ranging from 40-100-200 pips, every now and then. FREE TRADE !!!!