The Forex Thread

[PCA]

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

what???? Where would you have that weird information from?

Here are two link references. One from the WSJ and the other from Bloomberg. My one error is that the official target rate is 1.2 and not 1.1.

http://tinyurl.com/9vb69g7

http://tinyurl.com/bp5hm4q

ok then, the target rate of 1.20 has already been in place since April though.

[yoshiwara]

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

Not sure I understand your post.

The target rate is maximum 1.20 against a lot of upward pressure. What does 1.1 mean? That would surely mean the SNB allowing the CHF to appreciate even more, which they clearly do not want.

Currently simply the threat of selling limitless CHF against the EUR seems to have done the trick without costing an arm and two legs. The EUR is not going to disappear anytime soon.

Made a correction above. Yes 1.2 not 1.1

The object of the exercise was/is to make less attractive the holding of Swiss francs. Well OK unless you are holding Swiss francs.

Secondly with the increased production of Swiss francs there is an increased risk of inflation, unless of course the holders of the Swiss francs don't spend them.

[yoshiwara]

ok then, the target rate of 1.20 has already been in place since April though.

What is happening now is that savers with Euros have been withdrawing them from Greece, Italy, Spain and then converting and parking the money in Switzerland taking advantage of the capped rate. Now that the CHF is capped and will be for the foreseeable future I think it now lacks attraction other than for PIIGS escapees

Edited September 12, 2012 by yoshiwara

[Naam]

German Constitutional Court decided in favour of ESM. Armaggedon postponed, can kicking further down the road continues. outlook for worthless fiat paper positive.

Gold's falling - this and earlier lower borrowing costs for Spain and Italy kinda confirm my earlier thoughts about the market considering this milestone as the turning point or bottom of the crisis.

What's the best strategy now?

High yield bonds?

Equity indexes?

Some FX?

Commodities?

HY bonds (any currency) have been my strategy since i saved the first substantial amount of money to invest; that was 35 years ago. never changed the strategy except accumulating cash too since a few years.

[manarak]

German Constitutional Court decided in favour of ESM. Armaggedon postponed, can kicking further down the road continues. outlook for worthless fiat paper positive.

Gold's falling - this and earlier lower borrowing costs for Spain and Italy kinda confirm my earlier thoughts about the market considering this milestone as the turning point or bottom of the crisis.

What's the best strategy now?

High yield bonds?

Equity indexes?

Some FX?

Commodities?

HY bonds (any currency) have been my strategy since i saved the first substantial amount of money to invest; that was 35 years ago. never changed the strategy except accumulating cash too since a few years.

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

[Naam]

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

it's nice to trade but it's not nice being forced to trade

[PCA]

German Constitutional Court decided in favour of ESM. Armaggedon postponed, can kicking further down the road continues. outlook for worthless fiat paper positive.

Gold's falling - this and earlier lower borrowing costs for Spain and Italy kinda confirm my earlier thoughts about the market considering this milestone as the turning point or bottom of the crisis.

What's the best strategy now?

High yield bonds?

Equity indexes?

Some FX?

Commodities?

HY bonds (any currency) have been my strategy since i saved the first substantial amount of money to invest; that was 35 years ago. never changed the strategy except accumulating cash too since a few years.

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

you might want to look into Commodity Spreads and Outrights. When many other markets don't trend they do and it's a nice diversification to Currency and Stock Market plays.

[12DrinkMore]

ok then, the target rate of 1.20 has already been in place since April though.

Since last September.

[PCA]

ok then, the target rate of 1.20 has already been in place since April though.

Since last September.

let's ask the market, shall we?

[manarak]

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

it's nice to trade but it's not nice being forced to trade

yes,555

and I know it also takes discipline to not just do something and hope the market moves in your direction!

[yoshiwara]

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

it's nice to trade but it's not nice being forced to trade

Being under pressure to generate returns is not an easy place to be. The capital may be subject to a risk profile that is not warranted.

[manarak]

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

it's nice to trade but it's not nice being forced to trade

Being under pressure to generate returns is not an easy place to be. The capital may be subject to a risk profile that is not warranted.

Not worry too much, my other revenues are high enough to live on :-)

But I'm a bit muffed that I missed the gold move despite predicting it.

[yoshiwara]

I need some trends to trade on, because I don't have enough cash to live on interest, even high yield, and I will soon have even less cash because of a divorce...

it's nice to trade but it's not nice being forced to trade

Being under pressure to generate returns is not an easy place to be. The capital may be subject to a risk profile that is not warranted.

Not worry too much, my other revenues are high enough to live on :-)

But I'm a bit muffed that I missed the gold move despite predicting it.

It doesn't matter whether it is gold, stocks or currency but there is an essential truth in taking a position.

If we don't take a position but essentially just venture an opinion, then the strength of that opinion is weaker than we would like to think it was in hindsight.

Every one of us does this. The funny thing with the volatility of a market is that we can feel foolish the following day/week/month and then very wise the following day/week/month without having done a thing. Or vice-versa.

What I have (expensively of course) learned is that regular dividend income overrides the ups and downs of price.

So gold is out for dividends. Where one has play money for trading as opposed to investing, whether it is gold, forex or stocks, by all means have a go.

The trouble is unless you have a regular income it is IMHO not worth the risk in putting it all on trading or coins for the armageddon.

But some do. They do.

[manarak]

Not worry too much, my other revenues are high enough to live on :-)

But I'm a bit muffed that I missed the gold move despite predicting it.

It doesn't matter whether it is gold, stocks or currency but there is an essential truth in taking a position.

If we don't take a position but essentially just venture an opinion, then the strength of that opinion is weaker than we would like to think it was in hindsight.

Every one of us does this. The funny thing with the volatility of a market is that we can feel foolish the following day/week/month and then very wise the following day/week/month without having done a thing. Or vice-versa.

What I have (expensively of course) learned is that regular dividend income overrides the ups and downs of price.

So gold is out for dividends. Where one has play money for trading as opposed to investing, whether it is gold, forex or stocks, by all means have a go.

The trouble is unless you have a regular income it is IMHO not worth the risk in putting it all on trading or coins for the armageddon.

But some do. They do.

I'm sure every trader has learned expensive lessons!

I did too, and what you say about the weight of the opinion is very true.

But the investment vs. trading thing isn't that clear to me.

If investing wasn't speculation, equity investors would all earn the risk free interest rate for their currency.

I believe traders develop over the years an affinity with particular markets.

I have been bitten so often by equities - but have been mostly right about FX.

[Naam]

looking at EURUSD i have a broad grin on my face

[churchill]

yoshiwara

said ...

'So gold is out for dividends. Where one has play money for trading as opposed to investing, whether it is gold, forex or stocks, by all means have a go.'

Gold stocks pay dividends and are still cheap if you think gold is going up ..

http://www.marketwatch.com/story/10-stocks-least-addicted-to-the-feds-qe3-2012-09-14?link=MW_latest_news

http://seekingalpha.com/article/863031-buy-newmont-for-dividend-growth-and-to-ride-the-rally-in-gold

[12DrinkMore]

ok then, the target rate of 1.20 has already been in place since April though.

Since last September.

let's ask the market, shall we?

Let's ask the Swiss National Bank, shall we?

http://www.snb.ch/en/mmr/reference/pre_20110915_1/source

"Monetary policy assessment of 15 September 2011

Swiss National Bank enforces minimum exchange rate with utmost determination

The Swiss National Bank will enforce the minimum exchange rate of CHF 1.20 per euro set on 6 September with the utmost determination. It is prepared to buy foreign currency in unlimited quantities. It continues to aim for a three-month Libor at zero and will maintain total sight deposits at the SNB at significantly above CHF 200 billion."

And the latest news is no change.

http://www.snb.ch/en/mmr/reference/pre_20120913/source/pre_20120913.en.pdf

"Monetary policy assessment of 13 September 2012

Swiss National Bank leaves minimum exchange rate unchanged

The Swiss National Bank (SNB) is leaving the minimum exchange rate unchanged at CHF 1.20 per euro, and will continue to enforce it with the utmost determination. It remains committed to buying foreign currency in unlimited quantities for this purpose."

[yoshiwara]

looking at EURUSD i have a broad grin on my face

So much money has been lost betting against the euro which is considered (wrongly) by many to be a a one-way bet against.

[yoshiwara]

yoshiwara

said ...

'So gold is out for dividends. Where one has play money for trading as opposed to investing, whether it is gold, forex or stocks, by all means have a go.'

Gold stocks pay dividends and are still cheap if you think gold is going up ..

Gold miners (which are a business) can pay a dividend, but gold does not.

Trading on price, fine, if you have play money, but otherwise as an investment generates no income. Has to be sold down to get (wait for it) paper money to buy things, pay bills etc.

[PCA]

ok then, the target rate of 1.20 has already been in place since April though.

Since last September.

let's ask the market, shall we?

Let's ask the Swiss National Bank, shall we?

http://www.snb.ch/en...110915_1/source

"Monetary policy assessment of 15 September 2011

Swiss National Bank enforces minimum exchange rate with utmost determination

The Swiss National Bank will enforce the minimum exchange rate of CHF 1.20 per euro set on 6 September with the utmost determination. It is prepared to buy foreign currency in unlimited quantities. It continues to aim for a three-month Libor at zero and will maintain total sight deposits at the SNB at significantly above CHF 200 billion."

And the latest news is no change.

http://www.snb.ch/en...20120913.en.pdf

"Monetary policy assessment of 13 September 2012

Swiss National Bank leaves minimum exchange rate unchanged

The Swiss National Bank (SNB) is leaving the minimum exchange rate unchanged at CHF 1.20 per euro, and will continue to enforce it with the utmost determination. It remains committed to buying foreign currency in unlimited quantities for this purpose."

no, I better say nothing

[Naam]

yoshiwara

said ...

'So gold is out for dividends. Where one has play money for trading as opposed to investing, whether it is gold, forex or stocks, by all means have a go.'

Gold stocks pay dividends and are still cheap if you think gold is going up ..

Gold miners (which are a business) can pay a dividend, but gold does not.

Trading on price, fine, if you have play money, but otherwise as an investment generates no income. Has to be sold down to get (wait for it) paper money to buy things, pay bills etc.

does that mean you can't buy vegetables, steaks, fill up your car or get an airline ticket by paying with gold dust or nuggets?

[manarak]

Time for me to revive this thread as my forced posting vacation has ended a few days ago.

Situation now:

- AUD continues its free fall

- USD fell, then sideways vs. EUR

- Gold has hit its all time high vs. EUR

I'm still parked in CHF, my brain hasn't produced an investment strategy so far, apart from the obvious "buy gold" which I didn't act upon.

[Naam]

Time for me to revive this thread as my forced posting vacation has ended a few days ago.

Situation now:

- AUD continues its free fall

- USD fell, then sideways vs. EUR

- Gold has hit its all time high vs. EUR

I'm still parked in CHF, my brain hasn't produced an investment strategy so far, apart from the obvious "buy gold" which I didn't act upon.

besides Gold you missed the recent shooting up of subordinate and HY bonds based only on Draghi's yada-yada yakety-yak, not limited to Europe but globally.

[ace]

I've been overweight high yield bonds for 4 years - well done me :-)

I've got a bunch of limit orders on some high yield prefs right now, which still offer value imo.

But to my point, I'm looking to short the euro, any advice on which currency pair to trade? Maybe Euro / Yen? Sterling, usd, etc?

Sent from my A500 using Thaivisa Connect App

[Naam]

1. I've been overweight high yield bonds for 4 years - well done me :-)

I've got a bunch of limit orders on some high yield prefs right now, which still offer value imo.

2. But to my point, I'm looking to short the euro, any advice on which currency pair to trade? Maybe Euro / Yen? Sterling, usd, etc?

Sent from my A500 using Thaivisa Connect App

1. well done indeed. watch out! a number of HY prefs. will be affected by Basel III starting jan1, 2013.

2. i slowly increased my EUR quota from an alltime low of 12% to presently 26% and intend to add.

[manarak]

But to my point, I'm looking to short the euro, any advice on which currency pair to trade? Maybe Euro / Yen? Sterling, usd, etc?

If you want to short the EUR, I'd recommend shorting it against gold, yen may be another valid possibility, but gold is nearing its all time high in JPY.

If you believe the AUD is going for a rebound (I'm cautious), you could also benefit from a positive swap rate.

But as Naam pointed out, my feeling is also that the EUR has more or less hit the bottom or is very close to it, and my insticts tell me a lot of money is currently flowing back into EUR. This is a feeling based on observation of currency rates, especially EURCHF which is not crawling on the 1.20 floor anymore.

The 2 year EURCHF chart illustrates this very nicely:

http://www.xe.com/currencycharts/?from=EUR&to=CHF&view=2Y

The CHF is a very healthy currency, and there is no economic reason why the EUR should trade above the minimum of 1.20 set by the bold words of the former SNB director. Yet, the EUR does trade above 1.20 since Draghi's promises. So, something must be happening.

Edited October 8, 2012 by manarak

[Naam]

my feeling is also that the EUR has more or less hit the bottom or is very close to it, and my insticts tell me a lot of money is currently flowing back into EUR. This is a feeling based on observation of currency rates, especially EURCHF which is not crawling on the 1.20 floor anymore.