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Crude, Gold Jump After Goldman Says SNB Action Hints At “Massive ECB QE”

“This is a massive message from SNB to the market : ECB is going to do QE, and it’s going to be big…” notes Goldman Sachs and it appears Gold and Crude Oil are starting to get on that bandwagon.

Gold back above $1255

 

And WTI break $51…

 

And in context…

 

Via Goldman Sachs,

Removing the SNB peg takes out one of the biggest EUR buyers in the market.And of course, VERY notable this is happening 1-week ahead of the ECB, they possibly realised they could not continue to buy unlimited quantities when the ECB might print unlimited quantities.

Desk thoughts:

This is a massive message from SNB to the market : ECB is going to do QE, and it’s going to be big..No way I am keeping buying EUROs here

First Market will have to digest the pain of a 28% move at some point, also the USDCHF is down 15% which will HURT in the current long USD environment

Past that first wave, market will realise what it means for EURUSD…

For Emerging Markets: Comment from Magda Polan (GIR):

Strengthening of the CHF is negative for the remaining borrowers in FX but the size of CHF debt in Hungary is being significantly reduced thanks to the incoming debt conversion. The conversion rate has been set already in late November and banks have purchased large amounts of FX already. So most of the exposure is for corporate borrowers in CHF and for banks if they did not hedge their FX assets into CHF. For Poland, stronger CHF means higher debt in PLN terms, but lower CHF Libor rates also implies lower costs of remaining FX mortgages.

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