NEGATIVE RATES? SO WHAT! - To think the SNB has a negative interest rate policy and yet EURCHF is still having a hard time making any move to the upside. Clearly, the latest Eurozone political turmoil involving Greece has not done anything to help an SNB, already contending with an ECB on the verge of implementing a round of QE later this month. But if the SNB wants to continue to defend the 1.2000 barrier, it is going to have to do more than just NIRP. The SNB also has to worry about equity markets, which could be showing signs of weakness. Any weakness in stocks will translate into safe haven currency demand, and this will translate into Franc demand. I still think the SNB can defend the barrier successfully, but it is going to take some form of an intervention effort.
STRATEGY - I would be on the lookout over the coming sessions. Otherwise, 1.2000 will be at risk and a violation of the level could open up a nasty bout of stop-loss hunting below 1.2000. I am long EURCHF above 1.2000 and as per previous analysis, my stop-loss is just over 1.2000 at 1.20005 (not to be confused with 1.2005...ie stop is between 1.2000 and 1.2001). The idea is that if 1.2000 is broken there won't be any good chance to exit. And so, for this one exceptional circumstance, it makes sense to have the stop above the barrier rather than what would typically be a stop below. Moving on, I never got the chance to play the long GBPUSD or short USDCAD positions, but will be watching closely over the coming hours. Other trades for the moment include an out of the money oil long, flat AUDNZD position, and in the money US equity short.