Then I checked my inbox. There were pages and pages of messages from European readers saying “congratulations”
Other flight to safety assets were trashed as well. The long Treasury bond quickly gave back two points in the futures market. Gold plunged $80, then made back half. Could the Swiss move herald the beginning of a global “RISK OFF” TRADE? As British Prime Minister, Winston Churchill, said in 1942, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
I had been expecting something imminent from the Swiss Authorities in my August 29 piece “Time to Dump the Swiss Franc ” , and my August 31 article, “The Greek Assist on My Swiss Franc Short.” What really shocked me was that the normally conservative, staid, and cautious Central bankers in Bern had elected for the nuclear option.
In my 44 years in the foreign exchange market, this is the first time that I have seen a country switch its currency from free floating to quasi fixed. In one fell swoop, the Swiss have converted their currency from a bastion of safety as solid as the granite of the Matterhorn, to a patient in intensive care on the verge of going into a coma. They are hitching their wagon to the Euro just as it is about to run over a cliff. Now Europe’s banking crisis and sovereign debt disaster is Switzerland’
It was one of the sharpest one day moves in the history of the foreign exchange markets. One harks back to 1992, when George Soros famously broke the Bank of England, sending the pound plummeting. Even that affair was spread over several weeks. You really have to go back to the Nixon shock in 1971, when a president beleaguered by a losing war in Vietnam moved to take the US off the gold standard, to find moves of similar magnitude.
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