{"id":23972,"date":"2015-01-15T03:35:11","date_gmt":"2015-01-15T11:35:11","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=23972"},"modified":"2015-01-15T03:35:11","modified_gmt":"2015-01-15T11:35:11","slug":"the-swiss-franc-quietly-returns-to-early-2013-levels","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/15\/the-swiss-franc-quietly-returns-to-early-2013-levels\/","title":{"rendered":"The Swiss Franc Quietly Returns to Early 2013 Levels"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2014. <a href=\"http:\/\/seekingalpha.com\/article\/2429955-the-swiss-franc-quietly-returns-to-early-2013-levels\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>In August, 2011, the Swiss National Bank (SNB) took a series of extreme measures to attempt to arrest an accelerating strengthening in the Swiss franc (FXB). <a href=\"http:\/\/www.snb.ch\/en\/mmr\/reference\/pre_20110906\/source\/pre_20110906.en.pdf\" target=\"_blank\">These measures culminated in establishing a 1.20 floor against the euro (FXE) on September 6, 2011<\/a>:<\/p>\n<p>{snip}<\/p>\n<p>The Swiss franc did continue to weaken for another two months until the market ever so slowly moved to test the SNB&#8217;s resolve. {snip}<\/p>\n<p>In 2013, EUR\/CHF delivered two small run-ups: the first maxed at 1.257 and the second maxed at 1.264. Ever since then, the franc has been a very &#8220;boring&#8221; currency as EUR\/CHF has steadily drifted lower (franc strengthening). Over the last two weeks, the franc&#8217;s strength has suddenly accelerated, for example, sending EUR\/CHF to a 19-month low.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23974\" aria-describedby=\"caption-attachment-23974\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF-weekly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF-weekly.png\" alt=\"The Swiss franc has yet to mount a credible run of weakness against the euro since the immediate aftermath of the SNB&#039;s floor\" width=\"550\" height=\"375\" class=\"size-full wp-image-23974\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF-weekly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF-weekly-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23974\" class=\"wp-caption-text\">The Swiss franc has yet to mount a credible run of weakness against the euro since the immediate aftermath of the SNB&#8217;s floor<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_23973\" aria-describedby=\"caption-attachment-23973\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF.png\" alt=\"The franc&#039;s strength has suddenly accelerated in the past two weeks\" width=\"550\" height=\"375\" class=\"size-full wp-image-23973\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_EURCHF-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23973\" class=\"wp-caption-text\">The franc&#8217;s strength has suddenly accelerated in the past two weeks<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>It is easy to assume and claim that this sudden bout of strength is &#8220;safe haven&#8221; buying as a response to the increasing tensions in the Ukraine. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23976\" aria-describedby=\"caption-attachment-23976\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_FEZ.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_FEZ.png\" alt=\"This index of some of Europe&#039;s top stocks has gone from a post-recession peak to a negative year-to-date performance in less than two months\" width=\"550\" height=\"375\" class=\"size-full wp-image-23976\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_FEZ.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_FEZ-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23976\" class=\"wp-caption-text\">This index of some of Europe&#8217;s top stocks has gone from a post-recession peak to a negative year-to-date performance in less than two months<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Whatever the reason, it seems a perfect storm may be building over the franc once again that just might test the SNB&#8217;s resolve in coming weeks or months depending on how the potential catalysts listed above play out. Currency traders at least seem to lack any reason to &#8220;allow&#8221; the franc to depreciate in the near-term.<\/p>\n<p>On August 13, 2014, Bloomberg ran a story on the franc&#8217;s strength titled &#8220;<a href=\"http:\/\/www.bloomberg.com\/news\/2014-08-12\/mighty-franc-spells-headwinds-for-made-in-switzerland-label.html\" target=\"_blank\">Mighty Franc Poses Challenge for Made-in-Switzerland Label<\/a>.&#8221; The story contained several examples of Swiss companies losing profits and revenues due to the franc&#8217;s strength. However, the article never mentioned the currency&#8217;s impact on the economy as a whole. As it turns out, the franc&#8217;s strength has not sent Switzerland&#8217;s exports heading south. The chart below charts exports priced in millions of Swiss francs on the left axis versus the value of USD\/CHF on the right axis.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23978\" aria-describedby=\"caption-attachment-23978\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_switzerland-exports-vsUSDCHF.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_switzerland-exports-vsUSDCHF.png\" alt=\"Since at least 2007, Swiss exports have held steady within a wide range nearly independent from the value of the currency\" width=\"550\" height=\"252\" class=\"size-full wp-image-23978\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_switzerland-exports-vsUSDCHF.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_switzerland-exports-vsUSDCHF-300x137.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23978\" class=\"wp-caption-text\">Since at least 2007, Swiss exports have held steady within a wide range nearly independent from the value of the currency<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.tradingeconomics.com\/switzerland\/exports\" target=\"_blank\">TradingEconomics.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23979\" aria-describedby=\"caption-attachment-23979\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_SwitzerlandInflation.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_SwitzerlandInflation.png\" alt=\"Switzerland is only just now climbing out of a period of disinflation\" width=\"550\" height=\"258\" class=\"size-full wp-image-23979\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_SwitzerlandInflation.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/08\/140815_SwitzerlandInflation-300x140.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23979\" class=\"wp-caption-text\">Switzerland is only just now climbing out of a period of disinflation<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.snb.ch\/en\/mmr\/reference\/pre_20140619_1\/source\/pre_20140619_1.en.pdf\" target=\"_blank\">SNB Monetary policy assessment of 19 June 2014<\/a><\/strong><br \/>\n<\/center><\/p>\n<p><a href=\"http:\/\/www.tradingeconomics.com\/switzerland\/gdp-growth-annual\" target=\"_blank\">Switzerland&#8217;s GDP growth<\/a> has yet to return to pre-recession levels. Yet, overall, the Swiss are enjoying a remarkable combination of conditions: ultra-low interest rates, a strong (almost impervious) currency, relatively stable export values, and no inflation. <\/p>\n<p>The Swiss franc has been a relatively &#8220;boring&#8221; currency for a long time now. That stasis may soon change&#8230;<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: net long Swiss franc<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2014. <a href=\"http:\/\/seekingalpha.com\/article\/2429955-the-swiss-franc-quietly-returns-to-early-2013-levels\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2014. Click here to read the entire piece.) In August, 2011, the Swiss National Bank (SNB) took a series of extreme measures to attempt to arrest an accelerating strengthening in the Swiss franc (FXB). These measures culminated in establishing &#8230; <a title=\"The Swiss Franc Quietly Returns to Early 2013 Levels\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/15\/the-swiss-franc-quietly-returns-to-early-2013-levels\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[59,794,20,990],"tags":[385,28,1388,1598,335,1389,333,334],"class_list":["post-23972","post","type-post","status-publish","format-standard","hentry","category-economy","category-europe","category-forex","category-switzerland","tag-eurchf","tag-euro","tag-fez","tag-inflation","tag-snb","tag-spdr-euro-stoxx-50","tag-swiss-franc","tag-swiss-national-bank"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Swiss Franc Quietly Returns to Early 2013 Levels - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/15\/the-swiss-franc-quietly-returns-to-early-2013-levels\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Swiss Franc Quietly Returns to Early 2013 Levels - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2014. 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Click here to read the entire piece.) In August, 2011, the Swiss National Bank (SNB) took a series of extreme measures to attempt to arrest an accelerating strengthening in the Swiss franc (FXB). These measures culminated in establishing ... 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