Participant

We’ve obviously seen huge appreciation in the Swiss Franc over the last few days but how much longer will this play out? How much of this is a short squeeze and how much of it is fundamental. The ultra low interest Swissy is a “funding currency” & i think what we are seeing is a lot of “shorts” caught out by these huge gains and needing to cover positions quickly.

Bloomberg:

With a contract valued at 125,000 Swiss francs ($122,537) on Jan. 13, the value of the position was $3.24 billion.

https://www.tradingview.com/x/43GeUXHy/

As markets always overshoot there can be some ways to trade this on the other side as the franc will surely start to devalue: a) once the shorts are covered b) once the Swiss national bank -SNB- start “money printing” which it is going to have to do to push the value of the franc to a level that will not break the Swiss economy. Any thoughts?

 
Participant

Some of the over-valuation is there anyways because the CHF has always been a safe haven.

The Swiss currency sees a lot of demand because of a current account surplus and rock solid finances. That is why they have had to set a negative interest rate. But yes I see your point and expect lot of these big moves are shorts being squeezed out. The SNB has already said it prefers eur/chf at around 1.10 so we will have to see if they go along with QE.

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