The Swissie only needs to appreciate another 0.5% vs. the euro to reach the 1.20 level, so the market is becoming increasingly nervous of further intervention by the central bank. The remarkable thing is that this has come at a time when the euro has been subject to some fairly severe short-squeezes, a function of the stretched short positions which lie beneath (see comments below). Video:

In the interview below, Vecchio discusses actions by the ECB, the decoupling of the US from the rest of the world and more. Bullishness in felt only concerning the EUR/CHF floor.

The Brazilian economy ground to a halt in the third quarter, whilst China is suffering a growing over-hang in the property market (see below) which risks causing some significant ripples in the banking sector.  On this front, it’s interesting to note the jump in the yuan overnight, to a record high vs. the dollar at 6.3294.

Since the end of October, the dollar index is up by more than 7%, a very significant move for the world’s major reserve currency. Dollar demand over the past couple of months has been very pronounced for a number of different reasons. Video:

This sends EUR/CHF falling sharply from 1.2350 to 1.2250 and the pair is still shaking.

Christopher Vecchio of DailyFX analyzes the current situation of the euro, the bright side for the pound in the aftermath of the EU Summit, the low likelihood of more US QE, how the Canadian dollar will react to rising tensions around Iran, and more in the interview below.

Looking at public sector net borrowing (ex. interventions on banks), the Office for Budget Responsibility gauges this at GBP 122bln for the current financial year, some 11% lower than the GBP 136.7bln outturn in the 2010/11 financial year. On current trends, the UK is on course to meet this, with the first six months showing an 11% improvement vs. last year. Sterling has held up comparatively well, no doubt gaining some benefit from Europe’s growing problems, but the government still has its work cut out ensuring that borrowing is kept in check against the backdrop of a stagnant economy.

For no very good reason other than stops going off, we witnessed significant advances in risk assets, high-beta currencies and the euro, and another day of major losses for the previously impregnable greenback. The EUR managed to get above 1.38 at one stage – it started this week below 1.34. Cable threatened 1.58 at one point, up more than two figures – a remarkable achievement given the dreadful employment figures. High-beta currencies fared even better – the Aussie powered through parity reaching 1.0233 overnight, helped by strong buying from sovereign wealth funds and numerous stops. In just over a week, the AUD has jumped 8% from its low.

Vecchio also discusses the situation in the euro zone and lays out an option of a split with the monetary union, a split that may push the new currency union higher. This and more about the yen, franc and the pound, in the interview below:

It also indirectly pushed EUR/USD higher within the rising channel.