{"id":26344,"date":"2015-01-15T03:50:52","date_gmt":"2015-01-15T11:50:52","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=26344"},"modified":"2015-01-15T03:50:52","modified_gmt":"2015-01-15T11:50:52","slug":"short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/15\/short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro\/","title":{"rendered":"Short the Franc Even As Negative Rates Are Proving Insufficient to End Strength Versus the Euro"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on January 5, 2015. <a href=\"http:\/\/seekingalpha.com\/article\/2796435-short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Don&#8217;t look now, but the Swiss franc (FXF) is seemingly back for another test of the 1.20 currency floor against the euro (FXE). <\/p>\n<p><center><br \/>\n<figure id=\"attachment_26345\" aria-describedby=\"caption-attachment-26345\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_EURCHF.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_EURCHF.png\" alt=\"The Swiss franc has almost reversed all its losses against the euro from the announcement of negative rates\" width=\"550\" height=\"375\" class=\"size-full wp-image-26345\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_EURCHF.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_EURCHF-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26345\" class=\"wp-caption-text\">The Swiss franc has almost reversed all its losses against the euro from the announcement of negative rates<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>When <a href=\"http:\/\/seekingalpha.com\/article\/2764925-currency-markets-once-again-force-the-hand-of-the-swiss-national-bank\" target=\"_blank\">the market forced the hand of the Swiss National Bank (SNB) to take additional measures to weaken the franc<\/a>, the SNB rolled out negative interest rates. As the chart above shows, the impact was immediate, yet the market&#8217;s preference to fade the weakness was also immediate. {snip}<\/p>\n<p>In the meantime, the Swiss franc IS continuing to weaken against the U.S. dollar (UUP) &#8211; so much so that the USD\/CHF currency pair returned to parity to start off 2015.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26346\" aria-describedby=\"caption-attachment-26346\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_USDCHF.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_USDCHF.png\" alt=\"The U.S. dollar re-achives parity against the Swiss franc\" width=\"550\" height=\"375\" class=\"size-full wp-image-26346\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_USDCHF.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_USDCHF-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26346\" class=\"wp-caption-text\">The U.S. dollar re-achives parity against the Swiss franc<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>This weekly chart suggests that the U.S. dollar is breaking out against the Swiss franc and can very easily rally to highs last seen in 2010. {snip}<\/p>\n<p>These dynamics now make me prefer shorting the Swiss franc over shorting the euro. For example, it is very possible that the next monetary policies out of the ECB instill enough confidence in the market that traders start bidding the euro UP in anticipation of better days ahead. In such a case, EUR\/USD becomes an amazing, contrarian play. But this will still leave the SNB unsatisfied if EUR\/CHF stays just as low as ever with the franc bid up in sympathy. In other words, the onus of weakness seems to lie now much more heavily on the franc than the euro. Time should soon tell.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26348\" aria-describedby=\"caption-attachment-26348\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_FXE.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_FXE.png\" alt=\"Oh the ironies! When the euro was last THIS week, the running fear was a collapse of the entire monetary union.\" width=\"550\" height=\"375\" class=\"size-full wp-image-26348\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_FXE.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150104_FXE-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26348\" class=\"wp-caption-text\">Oh the ironies! When the euro was last THIS week, the running fear was a collapse of the entire monetary union.<\/figcaption><\/figure><br \/>\n<strong>Source for charts: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Be careful out there!<\/p>\n<p>Short the euro, franc; long the U.S. dollar<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on January 5, 2015. <a href=\"http:\/\/seekingalpha.com\/article\/2796435-short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro\" 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 January 5, 2015. Click here to read the entire piece.) Don&#8217;t look now, but the Swiss franc (FXF) is seemingly back for another test of the 1.20 currency floor against the euro (FXE). When the market forced the hand of the &#8230; <a title=\"Short the Franc Even As Negative Rates Are Proving Insufficient to End Strength Versus the Euro\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/15\/short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro\/\">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":[794,20,990],"tags":[385,376,28,335,333,460],"class_list":["post-26344","post","type-post","status-publish","format-standard","hentry","category-europe","category-forex","category-switzerland","tag-eurchf","tag-eurusd","tag-euro","tag-snb","tag-swiss-franc","tag-usdchf"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Short the Franc Even As Negative Rates Are Proving Insufficient to End Strength Versus the Euro - 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\/short-the-franc-even-as-negative-rates-are-proving-insufficient-to-end-strength-versus-the-euro\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Short the Franc Even As Negative Rates Are Proving Insufficient to End Strength Versus the Euro - 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 January 5, 2015. 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Click here to read the entire piece.) Don&#8217;t look now, but the Swiss franc (FXF) is seemingly back for another test of the 1.20 currency floor against the euro (FXE). When the market forced the hand of the ... 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