SNB and CHF appreciation

Written by Raul Lopez on . Posted in Trades & Analysis

Today I’ve read two articles about the Swiss National Bank concerns about the CHF appreciation:

First one“Switzerland’s central bank said yesterday it will increase the supply of francs to fight the currency’s massive overvaluation.”

So they are using the exact same strategy the Bank of Japan does, the question here is, will it be as unsuccessful as the one used by the BOJ? I think it will. A currency pair goes up or down based on the supply/demand for it, if it is going up these days its probably because traders and investors see the CHF as a safe haven, as a reserve currency, and whatever the monetary instrument they use to stop the overvaluation, sooner or later the market will correct and continue in the direction of its sentiment (which right now is CHF bullish), that’s exactly the market job.

The second one: “some economists have said the franc’s surge toward euro parity is adding pressure on the SNB to consider a peg for the first time since the Bretton Woods currency system was abandoned in 1973.”

Now, this one could stop the massive overvaluation (still they will need to intervene), but it would be very drastic measure. With this announcement, they are following again the BOJ steps, I think they were just trying to “influence” investors, and see if they could stop them from getting CHF instruments.

This is just my opinion, only time will tell what destiny has for the CHF.

Trade Safe!

Raul Lopez
Forex Course

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Raul Lopez

I've been trading the forex market for more than 11 years. All my trades are based on price action. Check out my Forex Coaching program, I can help you develop a system that helps you trade consistently.
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