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15 Jan 2015
FXSpace dominated by SNB surprise causing mayhem - FXStreet
FXStreet (Guatemala) - Valeria Bednarik, chief analyst at FXStreet explained that the currency market was not for the faint of heart this Thursday.
Key Quotes:
"The SNB in a surprise announcement ended its 1.20 EUR/CHF peg and cut interest rates down to -0.75%. There are many reasons behind this decision being one, the cost of this intervention: the SNB has already spent over 50% of its GDP in this regulatory process that started back in 2001".
"The pressure over the peg had increased exponentially, with the pair trading in a couple pips range right above the 1.2000 level for more of the last two weeks, meaning it would become increasingly expensive to hold it".
"But more important, SNB Governor’s Jordan quoted diverging economic policies as one of the reasons to lift the peg. This means the SNB is actually expecting a full-blown QE from the ECB next week, and it will be probably larger than expected. The SNB left the boat before it sunk".
Key Quotes:
"The SNB in a surprise announcement ended its 1.20 EUR/CHF peg and cut interest rates down to -0.75%. There are many reasons behind this decision being one, the cost of this intervention: the SNB has already spent over 50% of its GDP in this regulatory process that started back in 2001".
"The pressure over the peg had increased exponentially, with the pair trading in a couple pips range right above the 1.2000 level for more of the last two weeks, meaning it would become increasingly expensive to hold it".
"But more important, SNB Governor’s Jordan quoted diverging economic policies as one of the reasons to lift the peg. This means the SNB is actually expecting a full-blown QE from the ECB next week, and it will be probably larger than expected. The SNB left the boat before it sunk".