Swissy Back to Pre-SNB Floor Level

Good morning,

- Working on the Fed forecast comparison article. Fed Futures pricing in a 68% probability of a December hike. A month ago it was 6%...

- And just like that, USD/CHF is back trading at the strongest level since the 1.20 EUR/CHF Swiss National Bank price floor was abandoned back on January 15. The ‘’Swissy’’ is back at 10 month highs, reaching the high as I publish this article of 1.01699. Remember that price did get up close to this level back in March but this time has a feeling of inevitability around a break. So are we expecting a pop above the level? Definitely! I’m not a fan of Central Bank intervention as 99% of the time, fighting the market is absolutely useless. We saw this when the SNB tried to keep the CHF at unnaturally weak levels against the Euro and we all know that the market was the winner in that battle. But this isn’t intervention. The SNB of course hasn’t changed its stance of looking for a weaker CHF to help stimulate their own economy. While the ridiculous EUR/CHF price floor has gone, the central bank’s monetary policy muscle hasn’t, with negative rates now in full swing. With the Fed also on track to raise rates in December, could this be your pre-pop opportunity to get long?

- Gold Downtrend Support Could Influence Near 1050.

- The ZEW Indicator of Economic Sentiment for Germany has increased in November 2015. Gaining 8.5 points compared to the previous month, the index now stands at 10.4 points (long-term average: 24.8 points). The indicator has improved for the first time following seven consecutive declines. "The outlook for the German economy is brightening again towards the end of the year. Economic pessimism appears not to have increased after the terror attacks in Paris. The currently high level of consumption in Germany, the recent decline in the external value of the euro, and the ongoing recovery in the United States are likely to bolster the robust.

- The following are the latest technical setups for EUR/USD, USD/JPY, USD/CHF, AUD/USD, and NZD/USD as provided by the technical strategy team at Barclays Capital. EUR/USD: Our bearish view was encouraged by the break below initial targets near 1.0660. Our next targets are towards 1.0520 and then the 1.0460 year-to-date lows. USD/JPY: Monday’s bullish key reversal endorses our bullish view. We are looking for a move above resistance in the 123.60/80 area to signal higher towards our targets near the 125.30/125.85 highs. USD/CHF: A move above our initial upside targets in the 1.0130 area would endorse our bullish view. Our next targets.

- UAE Minister: OPEC confident that Oil will stabilize itself - Bloomberg. h/t - Live Squawk.

- $NZD, $EUR, and $CHF are expected to be the most active majors vs $USD with 1W implied volatility at 11.95, 10.38, and 9.93 respectively.

- Copper Surplus Faces Falling Premiums; Gold Slides before Fed Minutes.

- A pedestrian walks in front of a share prices board showing the numbers on the Nikkei 225 at the Tokyo Stock Exchange in Tokyo. Asian shares look set to open mixed on Wednesday, as investors remain cautious over the latest global geopolitical developments in the wake of the Paris terror attacks. Wall Street's Monday rally was short-lived, with the major averages struggling to hold higher in late afternoon trade on Tuesday, giving up an intraday gain that briefly took the S&P 500 into positive territory for the year and pushed the Dow Jones industrial average up more than 100 points on the back of solid earnings reports from Home Depot and Wal-Mart. Commodity prices took a tumble overnight with gold falling to near six year low. The precious metal hovered near $1,067 in Asian trade. Oil prices also edged up on Wednesday after reports of falling stockpiles and rising refinery activity but it will remain under pressure for the rest of the year, according to Reuters.

- China Real Estate Market Recovery Slows in October.

- What will happen to the economic fortunes of OPEC members if it turns out the Saudis and their Gulf Arab allies (UAE, Kuwait, and Qatar) bet on the wrong horse in November 2014? With the wager Saudi Oil Minister Al al-Naimi announced on market forces as the cure for the pressures on OPEC’s global market—a wager which their fellow OPEC members questioned and only reluctantly supported – could this backfire spectacularly for the cartel’s members? As the December 4, 2015 OPEC meeting in Vienna approaches, OPEC members have the tools to assess the impact of “lower for longer” crude prices on their countries.

- Major news for today: EZ GDP Estimate, US FOMC Minutes, US Housing Starts.

Have a great day!