CHF: The biggest bubble of all
As Jamie mentioned earlier, this has been a one way street for a number of years and I think most people are of the view that at some stage this particular bubble will burst and the exit door will be very narrow indeed. The market hasn’t wanted to buy the USD, EUR, or GBP and has only bought the JPY as a back-up plan leaving smaller currencies like the CHF, AUD, and CAD as preferred destinations.
I’m not willing to call the bubble burst just yet but a credible Greek solution could be the event which sends EUR/CHF shorts scurrying for cover and I’m sure that the SNB would take great glee in rubbing salt into speculator wounds if the CHF suddenly starts falling. For my first 23 years in the FX market, EUR/CHF (DMK/CHF) was the market’s most stable pair; for the last two it’s been one of the most volatile. It’s fallen from 1.60 to 1.18 and could easily rebound towards 1.40 once the tide turns. I’m watching the daily charts for any signs of a bottom forming.