With the not surprising move by the SNB; market participants were simply caught flat-footed as the timing would not have been perfect for US Traders & institutional players by this move. The typical market behavior for a London shake/fake-out that we have been anticipating; but nearly came from the Swiss National Bank's move. This has been reflected from our previous market view post on the market price behavior. Although, there were already statements made prior to the move but the unexpected move was one over the speculative trades by the Swiss National Bank traders. Surely, some talk would give rise with the BOJ may follow suite with a similar strategy which may not likely occur.
As a matter of market analysis, price behavior would now depend on the volume and open interest entry on the financial futures by hedgers and options traders with a cross trade between the Euro vs. Swiss Franc. The relative cross trade since the present ceiling has been set; others would simply say... a pegged vs. Euro would favor major investments in Europe as a way to protect their interest; in case such news would emerge back from the European crisis would snowball towards this quarter ending.
Fact 1: EURCHF currently at the 1.2022 from a low of 1.0030 last Aug. 08, 2011 is in place. Extensions would be a small variable price level of 1.2335+/-, however such move would make the USDCHF more stable after the fact and remain at bay for the time being while waiting for some fresh news on the US side for a continued rally for the US Dollar Index. USDCHF is currently at the 0.8573 from a low of the day's opening at 0.7849 levels. Initially the good numbers from the ISM-US Manufacturing was another fundamental providing a new lifeline for the USD rally other than the flight to quality /safe haven investor's mindset.
The SNB move sent the USDX higher to its current levels and spill over effects continued for the European majors as the GBPUSD sets a low at the 1.5950 as of this writing. Coming through our initial market objective set between the 1.5870-1.5990 trading range. Overall short trade on the GBPUSD set previously dated last 08.25 Sell @1.6269 is currently net positive on the balance sheet. The continuing market sentiments would hold for now as the USDX continues to gather some more positive breath for a rally. This would only hold true to its form above the 75.50 levels to maintain.
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