2 months later: USDCHF finally paid off

5:44 AM

Finally it paid off, well some of it

I took off a majority of my position on Friday at the 0.9760 level due to structural resistance. While it did drop after, I beleive there is more strength to go.


Part 1: CHF Weakness via Central Bank Intervention

I wrote on my wall that I did not think the SNB would like the dollar to be too strong against the dollar and levels for the EURCHF were close to the previous floor that was set by the SNB.

Since then both crosses have seen CHF weakness.

The EUR though, continues to soar. I believe in the long term, this faith is misplaced, but for now, let us leave it as that.


Part 2: USD Strength yet to recover

The reason why I am taking this direction is because a weak US dollar affect practically everyone. As the reserve currency of the world, there are implactions. 

Sentiment is weak for America because of the turmoil in the Whitehouse and I do not expect it to get better, but global implacations will be there. Moving too quickly too fast will cause some problems.


https://static.seekingalpha.com/uploads/2017/2/7/1693591-14865128824778109_origin.png

Oil for instance, involves the US Dollar, the higher the oil price in conjunction with the dollar the more one will make in their home currency.

This does not affect shale oil producers who have their expenses in US dollars and revenue in US dollars. But in a place like Russia where Revenue is in US dollars but expenses are in Rubbles, there is a large effect against the companies.

Now the same senario is terrible for countries who are dependent on oil. Oil prices have already recovered slightly on the back on the weaker US dollar, but this double whammy effect needs to be taken into consideration in the broad global market.


The DXY though has yet to bounce to a level where i am willing to say, "the dollar is going weaker from here". When that happens i will take out my other position. It helps that the USDCHF has a positive carry so i will get paid a small amount per day to keep the position open, this way i can afford to be patient.



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