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Old 20.04.2011, 12:22
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CHF EUR parity. When will it happen?

What's your view?

Last edited by Phil_MCR; 18.07.2011 at 11:43.
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Old 20.04.2011, 13:08
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Re: CHF=EUR parity. When will it happen?

Soon, depends on if Spain goes tits up.

The more pressure that's put on to the USD and the EUR with bad debt the more people run to the Chf.

I posted some interesting stuff I found on the USD/CHF situation. It pretty much carries over to this discussion.

http://www.europe2020.org/spip.php?article690&lang=en

10 yr Chf vs Euro from the ECB paints the picture.

http://www.ecb.int/stats/exchange/eu...ph-chf.en.html
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Old 20.04.2011, 13:18
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Re: CHF=EUR parity. When will it happen?

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What's your view?
Too many factors to consider.

plus factors for CHF value
  • If the rumour is true that the SNB will up interest rates before mid-year
  • If people keeping buying CHF as a safe haven (because there are not enough CHF around to meet demand & will the SNB print more in order to swop them for currencies that are declining in value - I think not)
Negative factors for euro
  • If the Greeks keep rioting & force euro deal restructure
  • New Irish government force euro deal restructure
  • Spanish proporty market goes into free fall
  • Somebody audits Italy's numbers
  • Belgium continues with no Government
I would say end of 3Q if all worst cases occur.
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Old 20.04.2011, 13:47
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Re: CHF=EUR parity. When will it happen?

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What's your view?
Parity is being way too optimistic!

The CHF will get hammered at some point in the future. Don't forget that it is overly overvalued thus causing difficulties for Swiss exporters.
Chf will have to decline in value or else the Swiss growth outlook will have to be lowered which will help decrease chf value in return.

2nd Possibility: Debt restructuring in Greece. This will send the Euro in a downward spiral, but still, I don't see parity! Perhaps the 1.10 € level.
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Old 20.04.2011, 13:48
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Re: CHF=EUR parity. When will it happen?

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Too many factors to consider.

plus factors for CHF value
  • If the rumour is true that the SNB will up interest rates before mid-year
  • If people keeping buying CHF as a safe haven (because there are not enough CHF around to meet demand & will the SNB print more in order to swop them for currencies that are declining in value - I think not)
Negative factors for euro
  • If the Greeks keep rioting & force euro deal restructure
  • New Irish government force euro deal restructure
  • Spanish proporty market goes into free fall
  • Somebody audits Italy's numbers
  • Belgium continues with no Government
I would say end of 3Q if all worst cases occur.
For me, I think it has been clear all along that Greece will either default ("restructure") and I suspect other countries could follow suit.

The SNB rate rise is an interesting one. SNB isn't really controlling inflation, but I wonder how long this can go on for? It would be a bit of an own goal to have bought all those EURs and then raise the rates.

My guess is that parity would be reached either on the initial Greek default or soon after on the subsequent financial aftershocks and events resulting from this.
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Old 20.04.2011, 13:51
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Re: CHF=EUR parity. When will it happen?

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Parity is being way too optimistic!

The CHF will get hammered at some point in the future. Don't forget that it is overly overvalued thus causing difficulties for Swiss exporters.
Chf will have to decline in value or else the Swiss growth outlook will have to be lowered which will help decrease chf value in return.

2nd Possibility: Debt restructuring in Greece. This will send the Euro in a downward spiral, but still, I don't see parity! Perhaps the 1.10 € level.
1.10 is a 12% fall from the 1.25 level.
1.00 is a 20% fall.

If it settles at a given level, I would expect it would dip below that level on the initial sell-off.

The other question is if the SNB will try to intervene again and how much money they will burn before capitulating.
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Old 20.04.2011, 14:04
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Re: CHF=EUR parity. When will it happen?

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1.10 is a 12% fall from the 1.25 level.
1.00 is a 20% fall.

If it settles at a given level, I would expect it would dip below that level on the initial sell-off.

The other question is if the SNB will try to intervene again and how much money they will burn before capitulating.
SNB is a very weak central bank imho when compared to ECB or the Fed.
Additionally, I don't see inflation as a big concern for the Swiss as opposed to their neighbours.
I do agree with you that on the initial sell-off it might hit parity but wouldn't stay at parity for long. With a Greek default, I see it at 1.10 €. The SNB will have to intervene or else it will cause them some serious problems.
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Old 20.04.2011, 14:27
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Re: CHF=EUR parity. When will it happen?

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For me, I think it has been clear all along that Greece will either default ("restructure") and I suspect other countries could follow suit.

The SNB rate rise is an interesting one. SNB isn't really controlling inflation, but I wonder how long this can go on for? It would be a bit of an own goal to have bought all those EURs and then raise the rates.

My guess is that parity would be reached either on the initial Greek default or soon after on the subsequent financial aftershocks and events resulting from this.
Quote:
About "The SNB rate rise is an interesting one.
The big Swiss banks are talking on this topic; whether it is a real forecast or they are just trying to push people from variable to fix rate mortgages would be a good debate.

Quote:
About Chf will have to decline in value or else the Swiss growth outlook will have to be lowered which will help decrease chf value in return.
This is a very logical view but I do not believe this market is following logic; if it was the CHF would not be so high today.

Quote:
About "The other question is if the SNB will try to intervene again"
My view is yes & with the same lack of success as last time. I do not think they are yet ready to accept the small SNB cannot compete successfully against the market forces driving the CHF up.
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Old 20.04.2011, 15:03
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Re: CHF=EUR parity. When will it happen?

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This is a very logical view but I do not believe this market is following logic; if it was the CHF would not be so high today.
Perfectly true, but remember that lower exports due to high CHF lead to a lower growth outlook thus triggering a chf sell-off.
It would be highly problematic if high demand for expensive Swiss goods continues...
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Old 20.04.2011, 15:31
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Re: CHF=EUR parity. When will it happen?

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Perfectly true, but remember that lower exports due to high CHF lead to a lower growth outlook thus triggering a chf sell-off.
It would be highly problematic if high demand for expensive Swiss goods continues...
Classic approach; but I am just not convinced people are buying the CHF based on CH growth forecast.
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Old 20.04.2011, 15:46
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Re: CHF=EUR parity. When will it happen?

Parity would force many trading companies out of CH as the overhead cost is becoming already too high (usd or other revenue chf cost) and it would become the kingdom of the shelf company.not good for the economy at all.
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Old 20.04.2011, 16:02
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Re: CHF=EUR parity. When will it happen?

It is very interesting and hard to believe that companies move here if they have many staff. If one looks at the trend, it must not look very positive in terms of expenses unless one is saving a lot more in taxes. Where is the tipping point. Switzerland must be far away from the tipping point because it is nearly impossible to find locally based talent, and wage expectations keep rising. I think that the likely result is a decimated service industry with only the ultra rich being able to afford any services. The rest of us will have to go to surrounding countries to spend our over-valued Francs.
The best term I heard for this refers to Switzerland as a "Rich Ghetto." Everything is over-priced but we are forced to live.
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Old 20.04.2011, 16:04
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Re: CHF=EUR parity. When will it happen?

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What's your view?
Discuss. .
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Old 20.04.2011, 16:54
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Re: CHF=EUR parity. When will it happen?

So taking all above into account.....should I buy my house in Spain now or delay until Q3?
If Spain does announce problems (cf Ireland, Greece et al) what is the effect liokely to be on the Euro and the Spanish property market? I just cant get my head around all these variables
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Old 20.04.2011, 17:32
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Re: CHF=EUR parity. When will it happen?

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Classic approach; but I am just not convinced people are buying the CHF based on CH growth forecast.
Neither am I.
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Old 20.04.2011, 17:36
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Re: CHF=EUR parity. When will it happen?

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So taking all above into account.....should I buy my house in Spain now or delay until Q3?
If Spain does announce problems (cf Ireland, Greece et al) what is the effect liokely to be on the Euro and the Spanish property market? I just cant get my head around all these variables
I think that the € will further depreciate against the CHF but I donät see parity anytime soon.
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Old 20.04.2011, 17:44
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Re: CHF=EUR parity. When will it happen?

There has been a recent phenomenon which defies classic approaches to forex. The more the CHF appreciates, the more Swiss luxury goods are sold in China...meaning that high price isnät always negative...but I doubt this is the case for exports going to the EU.

Last edited by Lejoker; 20.04.2011 at 17:56.
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Old 20.04.2011, 18:18
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Re: CHF=EUR parity. When will it happen?

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There has been a recent phenomenon which defies classic approaches to forex. The more the CHF appreciates, the more Swiss luxury goods are sold in China...meaning that high price isnät always negative...but I doubt this is the case for exports going to the EU.
depends on the goods. switzerland isn't exactly producing cheap t-shirts.

when you need to buy a ski-lift system, for example, there really is only one game in town, are you'll have to bend over and take the price quoted.
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Old 20.04.2011, 18:23
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Re: CHF=EUR parity. When will it happen?

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depends on the goods. switzerland isn't exactly producing cheap t-shirts.

when you need to buy a ski-lift system, for example, there really is only one game in town, are you'll have to bend over and take the price quoted.
It was more like watches...
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Old 20.04.2011, 20:34
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Re: CHF=EUR parity. When will it happen?

Interesting discussion. Parity would be a huge surprise, yet would expect some weakening of the euro.
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