"The Swiss National Bank said that it was discontinuing the minimum exchange rate of Swiss francs against the euro, sending the franc soaring against other currencies.", David Jolly, New York Times, 1.15.15I'm not a currency trading expert by any stretch of the imagination. To me the above line says that the Swiss Franc can free fall against the Euro as opposed to obtaining a minimum value against the Euro. I would think that's a bad thing for those holding the Swiss Franc. Why would this cause the Swiss Franc to soar ("The euro fell 12 percent after the announcement.")??

Does today's SNB move explain their cutting rates last December?Is that a signal the ECB will make something big, soon?

They're most likely anticipating huge demands for CHF (safe haven currency) in the near future, since they the central bankcan't defend and hold the ceiling if excess demand occurs.

"They're most likely anticipating huge demands for CHF (safe haven currency) in the near future, since they the central bankcan't defend and hold the ceiling if excess demand occurs. "You can buy only so many CHF for the near future, you'll run out and then...(?)..... The problem doesn't go away. So, at the risk of sounding repetitive, why would the Swiss Franc soar (why would one want to buy/hold CHF)? Happily, I'm not a trader......

What is interesting to me is that in a derisking environment like this, given that the floor was pulled, the euro trades only at parity to swissie (still expensive in my view) but the dollar goes to a 15% discount!! Why is the euro still at such relative premiums against the havens! I don't get it. Who still wants to hold that stuff?!?

The Swiss franc is a safe haven, so when uncertainty rises, investors buy CHF. Now, again uncertainty raised, so CHF appreciated. Those who held CHF now have a huge profit.

True, those who held the Swiss franc profited handsomely. But what happens when (NOT if) the franc free falls? The question then becomes why is the Swiss franc a safe haven? What makes it so special?

QuoteThe question then becomes why is the Swiss franc a safe haven? What makes it so special? 80 years of successful marketing by the swiss banks (including the SNB), with a consistent message: low inflation, bank confidentiality/secrecy, emphasis on safety (not returns, which are negative), etc etc ...

True, it's mostly about reputation.

With the shock move by SNB grabbing everyone's attention, I wonder if the price action at the close (New York 5pm) went unnoticed. At about 16:50 New York time on Thursday, EURCHF free falls by about 3%, before fully recovering in the minutes after 5pm. I'm not sure what went on here, but am curious about it. The 5pm level is used to settle retail brokerage accounts (anything else?). Any gains / losses accumulated during the trading day might be in several currencies, and are therefore affected by this fixing rate. I believe this is the case, even if open trading positions were closed out earlier in the day. Eg. Any large negative intraday P&L balances in CHF, become larger in EUR or USD terms if a lower EURCHF or USDCHF fixing is used. But I'm not clear as to why someone would have an interest from this scenario (who gains?). Another possibility might be that some brokerage (and bank?) EURCHF and USDCHF losses were held until the end of the day, in the hope of a rebound, but for regulatory reasons were forced to close out before 5pm New York. If this were the case however, then why the rebound in the minutes immediately after 5pm?

A funny thing happened to FXCM on Wednesday (not Thursday). On extremely heavy volume, the stock price dropped about 8%. Coincidence or conspiracy? FXCM

QuoteOriginally posted by: acastaldoQuoteThe question then becomes why is the Swiss franc a safe haven? What makes it so special? 80 years of successful marketing by the swiss banks (including the SNB), with a consistent message: low inflation, bank confidentiality/secrecy, emphasis on safety (not returns, which are negative), etc etc ..." in Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love - they had 500 years of democracy and peace, and what did that produce? The cuckoo clock. So long Holly. " QuoteTrue, it's mostly about reputation.

Oanda wins points for quickly forgiving negative balancesWhat's your view on Oanda 'forgiving' negative balances after NSB's move?(Their clients' losses < expected return on marketing? OANDA takes the other side of their clients' trades?) My apologies if my question actually doesn't make sense.

QuoteWhat's your view on Oanda 'forgiving' negative balances after SNB's move?On the surface it seems quite generous, since normally the customers are expected to pay (and it presumably says so in the agreement that the customers have signed, though I have not read it. In my experience it always says that the customer is responsible for negative balances).But realisticallly it may be difficult to collect from small investors. Even Interactive Brokers, not known for their soft hearts, admitted as much a few days ago: QuoteInteractive Brokers Group Inc. (IBKR) is unlikely to recoup trading losses suffered by its clients in the wake of the Swiss National Bank's surprise decision last week to remove a cap on the value of the franc, the brokerage's chief executive said Tuesday. The broker, which conducts trades for retail investors and others, saw losses of about $120 million on Thursday after the franc shot up against the euro, dollar and other major currencies. The move went against wagers that the franc would fall, resulting in steep losses, particularly for investors who had leveraged their bets. The broker is unlikely to recover those losses, Chief Executive Thomas Peterffy said in a conference call with analysts following the company's earnings release. The largest losses come from customers living in five areas outside the U.S., including Spain and Hong Kong. The laws of the countries and the degree of solvency of the investors involved could make repayment impossible, Mr. Peterffy said.

I am still thinking it was not easy to anticipate the moment when the SNB would reconsider its minimum exchange rateSNB - Press releases:Sep 6, 2011 - Swiss National Bank sets minimum exchange rate at CHF 1.20 per euroJan 15, 2015 - Swiss National Bank discontinues minimum exchange rate andlowers interest rate to ?0.75%"Recently, divergences between the monetary policies of the major currency areas haveincreased significantly ? a trend that is likely to become even more pronounced. The euro hasdepreciated considerably against the US dollar and this, in turn, has caused the Swiss franc toweaken against the US dollar. In these circumstances, the SNB concluded that enforcing andmaintaining the minimum exchange rate for the Swiss franc against the euro is no longerjustified. "