CHANGE OF STRATEGY FOR MY LONG EURCHF TRADE

Last September when SNB announced the minimum peg of eurchf at 1.20 many in the market were full of disbelief that SNB would be able to keep it without been broken  by the market players.

Me however, I was very confident that this time and this central bank will manage to do what it says and not let the 1.20 floor been broken for reason that I explain in my first article in this blog. As a result I undertook a long trade in the pair with a target at 1.35 minimum.

Since then of course, many things have changed with the most important being the resignation of Hildebrand after the accusation for his wife inside trading.  This has resulted to a lot of attacks in the currency by the speculators who try to break the floor now that the SNB has no official president. Of course unofficially Mr Jordan (no2 when Hildebrand was head) is the leader at the moment. 

Nonetheless, the currency has fallen up to 1.2035 during last week before rising slightly and closing the week to 1.2079. Since the beginning of the year we had no official announcement from SNB that is intervening directly in the FX market. Jordan and a few other officials have been trying so far to verbally intervene by restating SNB’s determination to keep the floor.

As I have already mentioned I have a large position long in the eurchf. All these events I mentioned forced me to rethink my strategy and start doubting about this trade. 

• The first think I decided to do is to put my s/l for half of my position at 1.1990 the other half I leave it at 1.2000.
• The second think is to watch for the data that are announced this week and how the currency will react. On Monday we have the release of currency reserves and on Friday CPI data!!!!!! (very very important)
• Finally we have the decision about Greece over the PSI deal this week

All the above factor and the way the currency will respond will help me taking my final decision next week on how to proceed with my position (close it or not). Until then I stay put and take advantage of the positive carry interest for one more week.