USDCHF Falls A Massive 1867 Pips In Just 24 Hours Making History

Yesterday USDCHF fell from 1.02205 to 0.83527 in just one day. This was a massive fall of 1867 pips that happened when Swiss Franc appreciated massively on the Swiss National Bank (SNB) policy announcement that it was  removing the Swiss Franc peg with the Euro. If you had planned to trade the Swiss National Bank policy announcement yesterday, you could have easily made 1867 pips with a risk of only 25 pips. Take a look at the following USDCHF H4 chart below!

USDCHF H4

Now SNB had pegged Swiss Franc with Euro at the rate of 1.20 franc for 1 euro. Just last month, it had announced that it would defend the peg vigorously. The Swiss franc’s 41 percent surge after the central bank unexpectedly lifted its cap against the euro is one of the biggest moves among major currencies since the collapse of the Bretton Woods system in 1971. Unlike previous foreign-exchange upheavals, today’s action occurred to one of the most-traded currencies that is considered a haven in tumultuous times, and few saw the move coming.

When SNB was making the announcement for removing the peg, EURUSD, NZDUSD, GBPUSD, AUDUSD all currenecy pairs showed massive volatility that surprised the currency traders. Take a look at the EURUSD chart below that shows the big candle formed on the policy announcement with a red arrow.

EURUSD H1

“If anything, the Swiss central bank’s decision to remove the floor and cut interest rates will make the franc easier to flee to in times of uncertainty and volatility,” said Kengo Suzuki, chief currency strategist at Mizuho Securities. “Now that the Swiss franc can be traded freely, and borrowed cheaply because of the negative interest rates, it will remain, along with the yen, the safe haven currency of choice.”

Markets were caught off guard Thursday when the Swiss National Bank (SNB) canceled its policy pegging the exchange rate of the euro buying 1.20 Swiss francs, a policy put in place more than three years ago to keep the currency from getting too strong and hurting the economy. The SNB also cut interest rates deeper into negative territory, by 50 basis points to negative 0.75 percent, in an effort to help cushion the blow.

This move by the Swiss National Bank is accelerating the EURUSD fall towards 1.000 level.

The euro is shaping up as the biggest casualty of Switzerland’s decision to scrap its currency cap. Soon after the Swiss National Bank unexpectedly decided yesterday to end its three-year policy of keeping the franc from appreciating beyond 1.20 per euro, bearish bets on Europe’s common currency soared. 

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