Swiss Franc could surge in a coming week? Trend and Momentum 26-Nov-2019

Looking at the latest trend and momentums of EURCHF and USDCHF, they are expected to be into downward trend which means Swiss Franc will be relatively stronger against both Euro and US Dollar.

EURCHF Trend and Momentum

USDCHF Trend and Momentum

On this Wednesday, ZEW (Centre for European Economic Research) will publish their survey expectations which consist of business conditions, employment conditions and the other factors in Switzerland. (ZEW Survey - Expectations)

If the actual figure beat the market consensus or expectation, it would be positive for Swiss Franc, which could lead the currency more bullish Of course, in case the figure disappointing the market, Swiss Franc can be into bearish trend. The point is that ZEW publication on Wednesday is a remarkable one which could affect Swiss Franc fundamentally.

Regarding US Dollar, much more economic events are on ahead in coming days. (See the economic calendar on QROSS X). Perhaps, USDCHF can be more volatile than EURCHF in a coming week.


To check Forex trading signals, download Forex Signal by QROSS X.

Swiss Franc (CHF) bullish in a coming week? Trend and Momentum on 5-Jul-2019

As a result that Switzerland and EU failed to agree on their future relationship, the investors of each economy are not able to trade stocks listed on each other's stock exchange since last Monday. While the impact for the long term is still not clear, some says there is no immediate impact on Swiss side and EU maybe more badly affected. Another source says high frequency traders will be the most affected badly.

>> [SWI] Has the EU scored an own goal with Swiss stock exchange freeze?
>> [Bloomberg] Swiss Stocks Trade Smoothly on Day One Without EU Recognition

In the meantime, some trend and momentum of CHF indicates that CHF could surge in a coming week. Picked up some better fitted ones, here is the trend and momentum of CHFJPY and USDCHF respectively.

[CHFJPY]

[USDCHF]

To check Forex trading signals, download Forex Signal by QROSS X.

USD downward trend in a coming week?

ECB's (dovish) decision shocked Forex market yesterday as their negative outlook to the European economy and geopolitical uncertainties over the world, such as Brexit, US-China trade war, ...

On the other hand, in short term horizon, USD have been relatively stronger for a last couple of week against major currencies JPY, CHF, AUD, NZD, GBP and EUR of course. Our trend and momentum signals indicate this bullish USD could get bounce back. In the next week, more stories about Brexit anticipated, the market could turn more negative mood. If it is, JPY or CHF which are traditionally safe asset in bearish market can be relatively stronger in the negative market.

Here are some of snapshots from the trend and momentum charts. Those are as of the beginning of today (UTC).

[GBPUSD Trend and Momentum 8-Mar-2019]

[AUDUSD Trend and Momentum 8-Mar-2019]

[EURUSD Trend and Momentum 8-Mar-2019]

EURUSD jumped after yesterday's ECB decision.




[NZDUSD Trend and Momentum 8-Mar-2019]

[USDCHF Trend and Momentum 8-Mar-2019]

[USDJPY Trend and Momentum 8-Mar-2019]

To check Forex trading signals, download Forex Signal by QROSS X.

Cross Currency Swap 18-Jan-2015

Cross Currency Swap (CCS, X Ccy Swap) is a financial instrument. It must be familiar with interest rate traders, and some of you learned in financial engineering course at the university.


This kind of swap is dealt for risk hedging purpose when banks issue their structured bond. One of the typical cases is that an European bank want be funded by Asian investors. Asian investors may invest in their local currency while the European bank want EUR or own currency. In this case, the European bank offers products in Asian local currency and hedges in cross currency swap, EUR vs JPY for example. The swap counter party could be investment banks or market brokers.

Cross currency swap provide some sense of currency exchange. Reminding CHF jump last week, traders who had USD/CHF cross currency swap must have had their Marked to Market jumped. The figure describes an example of cross currency swap in USD vs CHF. In this figure, Entity B pays CHF to Entity A up to the maturity against USD.

Size of the deal by investment banks is huge as their customers include the biggest companies in the world, and if some of them tend to have the positions like Entity B, their Marked to Market is disastrously degraded. Some of loss have not been realized yet, the positions still being held. The impact may be gradually appeared in coming months, probably capital requirement for the banks could be burden as some of them cover their losses.

Swiss Franc massive jump 17-Jan-2015

Last Thursday 15-Jan, CHF has soared in the largest scale as soon as Swiss National Bank (SNB) revealed they abandon currency ceiling on CHF. It was big surprise as seen in the market though it had been known that SNB was one of the biggest buyers for Euro bond.


Who won? Who lost?
 This is general perspective. Obviously, anybody who has asset in CHF got benefit and anybody who has debt in CHF will face heavier repayment. Export companies will have less revenues in CHF. Import companies will have more revenues in CHF unless they cut goods price. Or they could cut the price, and it would push the economy into deflation.


FX brokers
 However, things are more complicated for market players. This CHF jumping laid FX brokers in financial difficulty as they cover customers' loss. Alpari UK had entered insolvency as customer's loss exceeded their balance on the account, other brokers are looking for financial aid.

(Reuters) - The Swiss National Bank's abrupt move on Thursday to abandon its cap on the Swiss franc led to massive losses, and at least one insolvency, among retail foreign exchange brokers and trading houses across the globe.

Alpari UK

Online foreign exchange Broker Alpari UK said on Friday it had entered into insolvency after clients sustained losses on the Swiss franc. It said volatility and lack of liquidity had "resulted in the majority of clients sustaining losses which exceeded their account equity".

(http://www.reuters.com/article/2015/01/17/us-swiss-franc-brokers-factbox-idUSKBN0KP1EQ20150117)

USDCHF last 3 months

FX brokers provide spread-betting with leverage on the customers' account. The customers could enjoy profit in bigger scale by smaller deposit. Downside, they could make loss on their deposit and the loss may exceed their deposit due to the leverage. However, most of regulated brokers exercise margin-call which force positions closed before exceeding break-even point to avoid negative balance.
Basically, FX brokers hedge customer's position. When the position is closed by margin-call, it has to be traded at break-even point. However, CHF has jumped massive scale in few seconds on last Thursday, and the brokers fail to close positions at break-even point. Customers who had short positions in CHF must have gotten huge loss from the jump, and some of them were forced into margin-call at far way from break-even point.

SSMI in CHF and USD last 3 months

Stock market
Stock price has gone down after SNB made the announcement, but it could said the market is not so gloomy despite the price down in large scale. Looking at the figure, it describes SSMI stock index for last 3 months.
You see SSMI in USD did not go down after CHF jumped while SSMI in CHF massively went down. It implies objective value of the stock index has not gone down in USD.
It will probably take more time that the impact is realized in the real economy rather than immediately.


By the end of this month, the market is expected highly volatile as uncertain losses from CHF trade could be revealed in big banks, ECB makes decision of additional QE and Greek election where Syriza currently has the largest support rate.