In the last weeks, CHF (Swiss Franc) has been very weak against all the major currencies. Most likely there is more than one reason about it, including the SNB (Swiss National Bank) that has sold Swiss Francs and bought Euros (as it has often done in the last four and a half years).
Today I analyse Eur-Chf because it has reached an interesting level.
Two aspects are shown in the chart. The first, the price has reached an important area of resistance (1.14700/1.15000) that will hardly break easily.
The second, the 1.13600 level (approximately), the price of Eur-Chf on March 7, the day Draghi announced a new TLTRO for September during the ECB meeting.
The TLTRO (Targeted Longer-Term Refinancing Operations) that is the loan of money by the ECB to the credit sector (banks) at particularly favourable conditions, lasting four years to alleviate the problems of collection of European banks and support loans to families and businesses.
In other words, different names (Quantitative Easing and TLTRO) but the same type of operation (loans non-repayable to banks). Yes, because I strongly doubt that at the end of the four years, the banks will repay the loan.
All this translates into greater liquidity on the markets and, therefore, depreciation of the Euro. And if in the short term it is the speculation that moves a currency pair, in the medium-long term they are the fundamentals that decide the right exchange rate. For this, in the coming weeks, we will see a return of Eur-Chf, as the first target, in the 1.12000 area.
Then there would be to do a speech about CHF as a safe haven currency in times of crisis, but given the trend of Wall Street and the new highs reached (Nasdaq) or about to be reached (S&P 500), it is still a premature speech. However, selling Eur-Chf to cover the upward investment in equities, balancing the portfolio, could be a wise idea.
Today I analyse Eur-Chf because it has reached an interesting level.
Two aspects are shown in the chart. The first, the price has reached an important area of resistance (1.14700/1.15000) that will hardly break easily.
The second, the 1.13600 level (approximately), the price of Eur-Chf on March 7, the day Draghi announced a new TLTRO for September during the ECB meeting.
The TLTRO (Targeted Longer-Term Refinancing Operations) that is the loan of money by the ECB to the credit sector (banks) at particularly favourable conditions, lasting four years to alleviate the problems of collection of European banks and support loans to families and businesses.
In other words, different names (Quantitative Easing and TLTRO) but the same type of operation (loans non-repayable to banks). Yes, because I strongly doubt that at the end of the four years, the banks will repay the loan.
All this translates into greater liquidity on the markets and, therefore, depreciation of the Euro. And if in the short term it is the speculation that moves a currency pair, in the medium-long term they are the fundamentals that decide the right exchange rate. For this, in the coming weeks, we will see a return of Eur-Chf, as the first target, in the 1.12000 area.
Then there would be to do a speech about CHF as a safe haven currency in times of crisis, but given the trend of Wall Street and the new highs reached (Nasdaq) or about to be reached (S&P 500), it is still a premature speech. However, selling Eur-Chf to cover the upward investment in equities, balancing the portfolio, could be a wise idea.