SNB Intervention – Shortlived Indeed

Posted on June 27, 2009 by Yohay
Filed Under Forex Opinions | 5 Comments

The SNB intervened in the forex market to weaken the Swiss Franc. Though still above the levels before the intervention, USD/CHF has lost its hot air, and is now trading lower. A lesson about central bank interventions.

On Wednesday, the Swiss National Bank intervened in the forex market in order to weaken the Swissy. Switzerland’s export based economy suffers from a strong Franc, and the SNB wanted to help the economy.

The intervention came at a low point – when USD/CHF was trading at 1.0630. The SNB pushed the pair up to 1.1080, 350 pips higher. I wrote a post about how an intervention from a central bank is only temporary, and provides a great trading opportunity.

USD/CHF closed the week at 1.0834, significantly lower than the peaks reached after the intervention. In fact, almost 250 pips lower. The Swissy didn’t fall to the lows at the time of he intervention, but fell to the levels it traded during the week.

Note that also against the Euro, the Swiss Franc had a renewed strengthening: EUR/CHF rose from 1.50 to almost 1.54 due the central bank’s work, at finished the week at 1.5229.

So, a central bank intervention is an excellent trading opportunity – the currency pair will get back to normal very soon. It won’t necessarily get back to the price at the time of intervention, but a serious retracement to previous trading levels is bound to happen.

Remember this lesson towards the next intervention!

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Comments

5 Responses to “SNB Intervention – Shortlived Indeed”

  1. Forex Daily Outlook – November 24th 2009 | Forex Crunch on November 24th, 2009 2:18 am

    [...] up to 3.96 million. Later in the day, SNB Chairman Jean-Pierre Roth will speak. Will he talk about intervention in the forex [...]

  2. Parity Party for the Swissy | Forex Crunch on November 25th, 2009 8:51 pm

    [...] All of their interventions against the dollar failed to work. [...]

  3. Forex Weekly Outlook – February 8-12 | Forex Crunch on February 6th, 2010 7:38 pm

    [...] GMT. Switzerland enjoys good fundamentals but the central bank doesn’t like it at all. The SNB intervenes in the markets, but usually this doesn’t have a long lasting effect. This important figure is [...]

  4. EUR/CHF – Wild Fridays – Courtesy of the Bank | Forex Crunch on February 14th, 2010 5:47 pm

    [...] Click to enlarge. Remember that interventions are short lived. [...]

  5. EUR/CHF at All Time Low – Massive Intervention Underway? | Forex Crunch on March 24th, 2010 8:37 am

    [...] the SNB move from talking to acting? They’ve also seen that these interventions are often short lived -the markets have a will of their own. A very massive intervention is needed, not just a [...]

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