Posts Tagged: snb

 

Switzerland’s central bank has introduced a negative deposit rate to help it maintain its currency ceiling of SFr1.2 per euro, after the recent market turmoil spurred demand for safe assets and put the exchange rate.

The Swiss National Bank first introduced the ceiling in the middle of the eurozone crisis, which triggered immense inflows into what is considered one of the world’s safest harbours for money, and ramped up pressure on the Swiss franc.

The SNB’s move to introduce in effect a 0.25 per cent tax on sight deposit account balances held with the institution was motivated explicitly by a desire to make it less attractive to hold Swiss franc investments.

The decision sent the Swiss franc falling 0.6 per cent versus the euro to 1.20794, after having tested the 1.20 ceiling in recent weeks.

The statement said: >> Read More

 

BREAKING NEWS-FLASHAccording to sources  who were at a meeting between envoys and the Syrian coalition

  • Aim of military strike would be to deter further use of chemical weapons
  • Opposition has suggested list of potential targets
  • Western powers advise Syrian opposition to prepare for Geneva talks despite impending attack

Brent crude is now starting to take this seriously as it breaks $112 up to $112.54 high. >> Read More

 

This isn’t new news, and nothing is even close to happening yet, but:

The Swiss Cabinet’s office says the nationalist Swiss People’s Party has gathered enough signatures to force a referendum on banning the central bank from selling any gold reserves.

If passed, the vote would require the Swiss National Bank to keep at least 20 percent of its assets in gold

Currently the SNB holds just over 10 percent their approximately 500 billion Swiss francs in gold

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Psst. – I hear Cyprus has some to sell. Maybe even Portugal, Greece, Italy … etc. (hi France!)

Swiss to hold referendum on gold reserves

Also in the Financial Times (gated): Swiss to hold referendum on gold reserves

Europe Morning Wrap

13 February 2013 - 19:00 pm
 

Main feature was always going to be the BOE Inflation Report and so it proved…

  • CPI seen above its 2% target for a while yet
  • CPI risks broadly balanced at the end of December
  • GDP seen at 1.9% yy in 2 years time
  • MPC will maintain accommodative stance despite CPI above target
  • Supply reforms needed and stimulus for overseas buyers for UK exports

With the last two comments came a slam dunk of the Pound and support levels trashed all the way down to key area around 1.5540.. Seen some bounce since then but sellers on the rally understandably. EURGBP got bought by UK clearer for €4+ billion for reported M&A needs.

EURUSD has seen large sell interest at 1.3500 just taken out to test next resistance around 1.3520

USDYEN had an early run down below 93.00 but found good buying in the dips and was soon travelling north again along with EURJPY. Talk of fund selling around 93.75 has put a cap on it for the moment. Russian Dep Fin Min comments that Yen has definitely been overvalued adding to Yen weakness prior.

Other news:

  • EU/US free-trade talks to commence by June
  • Sweden leaves repo rate unchanged at 1% and sees no change this year
  • SNB to closely monitor over-heated housing market and will reassess/deactivate CCB as necessary.. Kind of put a base under USDCHF and EURCHF as it would help dampen CHF demand
 

With last week’s announcement by the Bundesbank of the repatriation of 674 tons of German gold from Paris and NY over the next 7 years, we predicted that an avalanche of gold repatriation requests would soon be made to the BOE and the NYFed. 
It appears that Switzerland may be next to the game, much to the dismay of the SNB. The Swiss gold initiative, an initiative to Secure the Swiss National Bank’s Gold Reserves,launched in March 2012 by four members of the Swiss parliament, has grown to 90,000 supporters. 
Once 100,000 supporters are achieved, the Swiss Parliament must take up the referendum.

The initiative asserts that the Swiss people should have a right to vote on 3 thingsnone of which will please the banking cartel:
Click here for more on the Swiss Gold Initiative:

Button-Down Central Bank Bets It All

09 January 2013 - 11:30 am
 

ZURICH—Switzerland, for decades a paragon of safety in finance, is engaged in a high-risk strategy to protect its export-driven economy, literally betting the bank in a fight to contain the prices of Swiss products sold abroad.

The nation’s central bank is printing and selling as many Swiss francs as needed to keep its currency from climbing against the euro, wagering an amount approaching Switzerland’s total national output, and, in the process, turning from button-down conservative to the globe’s biggest risk-taker.

Switzerland’s virtue is the root of its problem: broad confidence in the Swiss currency and economy has investors hungry for francs to escape euros, the currency of its shaky European neighbors. Such demand makes francs more expensive and, in turn, drives up the price of Swiss exports.

In the past three years, the Swiss National Bank SNBN.EB +0.10% has printed francs to buy euros and other currencies in a swelling portfolio of foreign assets four times what it was at the beginning of 2010.

Nearly every major central bank is buying nontraditional assets to resurrect domestic economies in the wake of the worst global recession in 75 years. The U.S. Federal Reserve is buying mortgages; the European Central Bank is making unusually long loans to banks; and the Bank of Japan is buying real-estate investment funds. >> Read More

 

long-time investors, global macro funds and US investment banks are moving into gold and the Swiss franc again.  The SNB had to buy euros and print new Swiss francs of around 5 billion francs last week, as today’s monetary data show.

There are still some FX traders who are convinced that the SNB will hike the floor to 1.22. Hence, currently both the SNB and these traders are short CHF. However, in order to balance the total trades, there must be some big accounts who are buying CHF.

We do not believe that the SNB moves the exchange rate secretly to 1.22, but they would do an official announcement. An announcement would be much cheaper for the central bank because many FX traders would trade on behalf of the SNB and long-term investors would not pile into CHF as much as they currently do.

Moreover,  a new floor would destroy some of the SNB credibility and risks of huge losses would increase.

The EUR/CHF is trading around 1.21, exactly between floor and rumor.

  >> Read More

 

In a move that will surely shock, shock, the monetary purists out there, the Bank of Japan has just gone and done what we predicted back in May 2011, with the first of our “Hyprintspeed” series articles: “A Look At The BOJ’s Current, And Future, Quantitative Easing” (the second one which discussed the imminent advent of the ¥1 quadrillion in total debt threshold was also fulfilled three weeks ago). So just what did the BOJ do? Why nothing short of join the ECB, the BOE, and the Fed (and don’t get us started on those crack FX traders at the SNB) in electronically printing even more 1 and 0-based monetary equivalents (full statement here). From WSJ: “The Bank of Japan surprised markets Tuesday by implementing new easing policies and moving closer to an explicit price target, the latest sign of growing worries around the world about the ripple effects of the European debt crisis on the global economy. With interest rates already close to zero, the BOJ has relied in recent months on asset purchases to stimulate the economy. In Tuesday’s meeting, the central bank expanded that plan by ¥10 trillion, or about $130 billion. The facility, which includes low-cost loans, is now worth about ¥65 trillion, or $844 billion.” The rub however lies in the total Japanese GDP, which at last check was $6 trillion (give or take), and declining. Which means this announcement was the functional equivalent to a surprise $325 billion QE announced by the Fed. What is ironic is the market reaction: the BOJ expands its LSAP by 18% and the USDJPY moves by 30 pips. As for gold, not a peep: as if the market has now priced in that the world’s central banks will dilute themselves to death. Unfortunately, it is only at death, and the failure of all status quo fiat paper, that the real value of the yellow metal, whose metallic nature continues to be suppressed via paper pathways, will truly shine.

The WSJ explains the BOJ’s stunning decision further:

Only one out of the 11 analysts polled by Dow Jones Newswires had predicted the BOJ to ease this week.

 

Most BOJ watchers had said that while there were concerns over the impact of the strong yen and the European debt crisis, neither financial nor economic conditions had worsened to levels that warranted immediate further action. 

The BOJ policy board also revised the wording of its “understanding of price stability,” saying now it has set a “price stability goal” of 2% or lower in the core consumer price index in the medium- to long-term and a goal of 1% growth for the time being. For calendar year 2011, Japan’s core consumer price index—excluding food prices—was negative 0.3%.

 The bank had come under criticism that its definition of price stability, the goal it seeks to achieve in its fight against deflation, was too convoluted and vague. Such attacks had increased in recent weeks after the U.S. Federal Reserve in late January adopted a more explicit price target. 

Faced with a prolonged deflation, politicians have stepped up their calls on the BOJ to take fresh action, with some threatening to revise legislation to strip away the central bank’s independence from the government.

First of all, don’t get us started on inflation targeting. Or rather, get Dylan Grice started: he will tell you all about it, and then some. >> Read More

 

In a move that will surely shock, shock, the monetary purists out there, the Bank of Japan has just gone and done what we predicted back in May 2011, with the first of our “Hyprintspeed” series articles: “A Look At The BOJ’s Current, And Future, Quantitative Easing” (the second one which discussed the imminent advent of the ¥1 quadrillion in total debt threshold was also fulfilled three weeks ago). So just what did the BOJ do? Why nothing short of join the ECB, the BOE, and the Fed (and don’t get us started on those crack FX traders at the SNB) in electronically printing even more 1 and 0-based monetary equivalents (full statement here). From WSJ: “The Bank of Japan surprised markets Tuesday by implementing new easing policies and moving closer to an explicit price target, the latest sign of growing worries around the world about the ripple effects of the European debt crisis on the global economy. With interest rates already close to zero, the BOJ has relied in recent months on asset purchases to stimulate the economy. In Tuesday’s meeting, the central bank expanded that plan by ¥10 trillion, or about $130 billion. The facility, which includes low-cost loans, is now worth about ¥65 trillion, or $844 billion.” The rub however lies in the total Japanese GDP, which at last check was $6 trillion (give or take), and declining. Which means this announcement was the functional equivalent to a surprise $325 billion QE announced by the Fed. What is ironic is the market reaction: the BOJ expands its LSAP by 18% and the USDJPY moves by 30 pips. As for gold, not a peep: as if the market has now priced in that the world’s central banks will dilute themselves to death. Unfortunately, it is only at death, and the failure of all status quo fiat paper, that the real value of the yellow metal, whose metallic nature continues to be suppressed via paper pathways, will truly shine.

The WSJ explains the BOJ’s stunning decision further:

Only one out of the 11 analysts polled by Dow Jones Newswires had predicted the BOJ to ease this week.

 

Most BOJ watchers had said that while there were concerns over the impact of the strong yen and the European debt crisis, neither financial nor economic conditions had worsened to levels that warranted immediate further action. 

The BOJ policy board also revised the wording of its “understanding of price stability,” saying now it has set a “price stability goal” of 2% or lower in the core consumer price index in the medium- to long-term and a goal of 1% growth for the time being. For calendar year 2011, Japan’s core consumer price index—excluding food prices—was negative 0.3%.

 The bank had come under criticism that its definition of price stability, the goal it seeks to achieve in its fight against deflation, was too convoluted and vague. Such attacks had increased in recent weeks after the U.S. Federal Reserve in late January adopted a more explicit price target. 

Faced with a prolonged deflation, politicians have stepped up their calls on the BOJ to take fresh action, with some threatening to revise legislation to strip away the central bank’s independence from the government.

First of all, don’t get us started on inflation targeting. Or rather, get Dylan Grice started: he will tell you all about it, and then some. >> Read More

 

This week’s MoF intervention in the FX markets, while not quite unprecedented (trailblazer Hildebrand aside), was certainly sizable, surprising, and potentially sustained – no matter how many times we were told by Mr. Azumi that he was ‘watching’ closely. Our question, and one discussed in a Bloomberg story this evening, is it possible to change the course of USDJPY via intervention – and perhaps more presciently (given growing global interest in capitalist/Keynesian spending escalation), was the expected $512bn loss that the country faces on these FX positions alone worth it? Tohru Sasaki, of JPMorgan’s Global FX Strategy group, address his concerns at both the unilateralism and the worrying perspective that the Japanese might try to emulate the SNB – which he sees as almost impossible to achieve – especially since the ceiling on CHF leaves JPY and USD as the only anti-cyclical currencies. 

It’s difficult to change the trend of the currency market. Even if the action can stem the currency’s gains temporarily, the yen will eventually appreciate.”

 

We speculated yesterday on the coincidental ‘pegging’ style of the intervention yesterday both to CNY and USD (obviously intertwined) specific levels with the view that perhaps a slow and creeping anti-Bretton Woods broken Nash equilibrium was happening as currencies were getting ‘fixed’. Sasaki, of JPM, notes four reasons why this is unlikely to be successful/possible – although losing $512bn is always an incentive to double down? >> Read More

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Technically Yours,
Team ASR,
Baroda, India.