Forexlive European wrap: Mild risk aversion evident

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When I say ‘mild’ I mean MILD.  Well at least so far.  Eurostoxx 50 off around -0.3%, benchmark 10 year treasury yield down at 1.6885% from the 1.7161% I jotted down first thing.

EUR/USD down at 1.3050 from early 1.3085.   Tried to rally early but ran into solid offers at 1.3100.  Talk of decent ‘Swiss’ interest to sell up there.  Early talk had buy orders clustered down at 1.3040/50 and they’re just about holding the line.

USD/JPY down at 83.30 from early 83.60.  Talk of sell orders clustered up at 83.70/00 ahead of 84.00 barrier option interest.

Cable marginally lower at 1.6120 from early 1.6140.

11 Comments

  1. The Swissis are becoming a bit of party pooper. Every time we are about to break through some major resistance they unload their EUR holdings. Agreed, they have amassed quite an amount in the last 2 1/2 years, but WTF are they unloading at pivot points when there is a possibility to unload at better prices? Don´t get it. Who is sitting in front of their screens at SNB? A rookie?

  2. Should think their trades go thru the BIS Billy

  3. Generally they go through a Dutch prime broker, actually

  4. am i right to guess that since the SNB are hold on to a super short CHF position.. they might liquidate the positions first?

  5. Mornin Jamie whats your view on EUR please?

  6. @JY
    They don’t liquidate their CHF position as in essence they don’t have one seeing as they print CHF to fill the hole. The liquidation is done from the Euro’s they buy (against the CHF) into other currencies. They’ve mainly been buying AUS against their Euros amongst others.

  7. Sorry, need to correct myself slightly,
    “At the end of September, the SNB held 49 percent of its reserves in euros, 27.6 percent in dollars, 6.7 percent in pounds sterling and 4.2 percent in other currencies.”

  8. Eur/Usd View: Recapping yesterday’s comments: Eur/usd will follow stk mkt till year end. stk mkt is holding a bullish stance on eventual fiscal cliff avoidance. Today’s added comment: The politicians will not resolve fiscal cliff for one very big but simple reason, “A rise is upcoming in the capital gains tax rate”. Just imagine what the stk mkt would do if that were to be annouced before year-end. Simple.

  9. Conclusion: Therefore the polticians will not resolve the fiscal cliff threat till the new year to avoid a stk mkt sell-off. The mkt would sell-off if the announcement of an increase in the capital gains tax were to be announced during the current year, for the simple reason of paying a lower rate of capital gains beore it”s too late.

  10. @Danny do you have CGT projections for just one fiscal year?

  11. None, sorry. They don’t affect me.

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