Looks like someone’s pulled the short straw at Nomura and have been asked to cover the Swiss gold vote.
Nomura strategist Yujiro Goto has put out a note saying that the bounce in EUR/CHF may not last long when we open in Asia
He says that the result was well expected and focus will now shift to difference between ECB and SNB monetary policy. That the ECB may be introducing sov QE and the lower european bond yields will put the pressure right back on the pair into the ECB meeting on Thursday, and for the next 6 months or more.
Just to add to Adam’s result post, SRF are now reporting that 77.3% rejected the gold initiative.
The level of bounce in EUR/CHF has been something we’ve been discussing a lot last week. I agree that we might not get such a big bounce in this pair considering how many people are in the trade, and why I believed jumping on other swiss pairs might offer the better reward.
I’m looking for an initial relief bounce in EUR/CHF, followed by the profit takers knocking it back down a bit, probably from around 1.21 (if we get there) back to somewhere like 1.2050, followed by maybe some second wind buying as the TP brigade finish. For my own trades I’m planning for the pair to consolidate around 1.2075/2100 level from now on and back to the normal ebb and flow of trading the fundamentals and monetary policies
Obviously I hope I’m wrong and we’re trading 1.23+ when I wake up tomorrow, but over the years I’ve learnt to expect the lower bound of expectations rather than the jackpot as it’s less disappointing this way. Plus we’re still in an environment where no man and his dog want to buy euros yet.
For other Swiss pairs, CHF/JPY is one I’ll be keeping an eye on as that might be a good dip buy, given how weak the yen has been the last couple of days. I’m already long GBP/CHF too which is well in the money already so I’m happy to let that run a bit longer.
Gold is another relative unknown as it fell even with the bullish Indian import news. That suggests that the gold vote is weighing heavier in the balance. Keep an eye on the 1180 level that we have been pivoting.
Gold weekly chart 30 11 2014
If we don’t get a big drop on the open and shorts cover then holding this level will be key to confirming a proper break, from which shorts can probably hold out for another look lower. Get back above and the indecision in the market about this level remains.
Enjoy what’s left of your weekend and good luck all you Swissy and gold traders for tonight’s opening.