U.S. asset managers to put large sums of money to the fact that the Swiss franc drops. The data of the Chicago Mercantile Exchange show. The Gr��nde:
On the Chicago Mercantile Exchange is running a unprecedented bet against the Swiss franc: The reporting of Asset managers have built up in the Swiss franc Futures massive short positions. Since the beginning of the year, you have so many Futures contracts against the Swiss franc accumulates, your short position corresponds to six times the usual positioning.
Increased speculation against the Swiss franc
The Notional amount of these Futures is almost 4 billion Swiss francs, although not huge. However, it is assumed that the attitude of the Swiss franc is in the much larger foreign exchange forward market, similar or even identical.
Before the introduction of the minimum Euro exchange rate by the national Bank in 2011, had kept the large asset managers, the majority of a net long position in terms of a stronger franc. The “Swissy” by 2017, the speculation is not interesting anymore, since the SNB has kept the franc exchange rate to the Euro and the Dollar in a narrow Band stable. Since 2018, the speculation in the Swiss franc has, however, increased. It is very significant positions in the Swiss franc Futures were built up and dismantled again.
The bet against the Swiss franc already running
The current betting against the Swiss franc are mainly betting on the national Bank: they reflect the expectation that the SNB wants to weaken the Swiss franc is active.
With his statements that the SNB can reduce, if necessary, the interest rates further, has aroused its President, Thomas Jordan, the speculation on even deeper negative interest rates: This should drag the Swiss franc down with it. At the same time in the venturesome market has taken the environment of the last few months, the importance of the franc as a safe haven.
The SNB makes risk management
The Asset Manager to sit as much out of the window and position yourself so one-sided, because you can see the SNB are protected: they include a significant appreciation of the Swiss franc, by counting, that the SNB would fight with interventions. In fact, the national Bank assumes, in their eyes, for the risk management.
The Swiss franc has become in comparison to the Dollar and the Euro weaker, but only by a few cents. As long as the mood on the financial markets remains optimistic, you will tend to the Swiss franc continues to be weak. This is because the SNB does not exclude it is convenient to change its interest rate policy independent of the ECB and the Fed.
trade dispute makes Frank price nervous
The reaction of the Swiss franc to the escalation of the trade dispute between the United States and China, however, has shown that the bet is on a weak franc. After the announcement, and the imposition of higher punitive tariffs by the government, Trump was the Swiss franc to the Dollar (and weakened also against the Euro) immediately more expensive.
It can be dangerous to rely on the protection against an appreciation of the Swiss franc Intervention by the SNB. The national Bank will stop with the interventions, a rapid and strong appreciation of the Swiss franc, but not at the current levels, but only a few cents lower.
speculation against the Swiss franc is a risk
The one-sided short positioning against the Swiss franc carries the danger that it comes suddenly to a strong counter-movement. If the nervousness rises on the financial markets, will be looking for the Swiss currency suddenly. Then the speculation will limit the increasing losses and the short positions will be closed. This will reinforce the upward pressure on the Swiss franc significantly and can lead to a rapid upward thrust. A decline in the dollar’s well below parity and the Euro below 1.12 is in such a case.
Thomas Stucki is the CIO of the St. Galler Kantonalbank. He leads the SGKB Investment Center with approximately 35 employees and is responsible for the management of client mandates and investment funds in the amount of 7.5 billion Swiss francs. Previously, he was head of Asset Management of the Swiss national Bank is responsible for the management of foreign exchange reserves.
Thomas Stucki is a graduate with a doctorate in Economics from the University of Bern and is a CFA charterholder.
This article was published in the “handelszeitung”. More exciting articles, see www.handelszeitung.ch.