Tuesday, January 20, 2015

Post SNB - Leveling the Forex Playing Field


The start of the Asian & European trading sessions were a little more subtle from last week’s surprise move by the SNB which resulted to a wild ripple effect on the currency markets not only for banks, but with a list of Foreign exchange brokers and hedge funds being affected with liquidity in the market. Everyone was caught flat footed with the news especially for retail clients and traders holding short-CHF related positions with the USD contrary to other investors in the EURCHF cross currency rate. 
Some analysts have mentioned, with the expectation of that a large ECB Bond Buying programs’ QE move would continue a EURO decline. And with the SNB cost to maintain its EURCHF cap would no longer be sustainable to carry. Thus, more likely have driven the decision to abandon its currency cap before the Jan 22 date. The timing of such would have been criticized because of the repercussions & abrupt effects brought about in the global financial markets, banks and investors.

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