I remember waking up to the EUR/CHF peg and being blown away by the madness in the market.
I think I was on the right side of the trade, even though I was probably wrong in questioning the wisdom of pegging to a sinking ship like the euro.
Here’ what I wrote in my end-of-day wrap on Sept 6, 2011:
Even after a full day, looking at my ticker and seeing a 1000+ pip move in EUR/CHF is hard to fathom. The pair drifted higher in New York to 1.2059 after falling as low as 1.2010. USD/CHF continued to track higher in US trading, gaining about 100 pips since New York traders arrived at their desks and trading at the highest since late May.
There was lots of talk throughout the session about the consequences of unlimited SNB buying of EUR/CHF. The early feeling was that it would boost EUR broadly but that sentiment was short-lived. After spiking to 1.4280, the pair started to roll over and hit a session low of 1.3972 shortly before the European close. A daily close below the 200-day moving average (1.4016) for the first time since January looks probable.
Cable weathered the storm early on but stops eventually gave way, sinking it as low as 1.5922. It’s the lowest since July 12.
The Canadian dollar easily outperformed the commodity currencies ahead of tomorrow’s BOC decision. The ISM services data helped but the culprit was a rebound after an exaggerated move lower on Labor Day.
Speculation is mounting that the Japanese Ministry of Finance could follow in the footsteps of the CHF. The yen was broadly weaker Tuesday despite the risk averse mood. USD/JPY drifted higher throughout the session and is brushing up against the late Aug high of 77.69.
