By now everybody must have heard the sad news from Switzerland. Bowing to international bulling, the Alpine nation has agreed to end its strict bank secrecy laws, in an effort to help pursue tax evaders. Last bastion of privacy has fallen to nosy governments. Or has it? It really depends on the point of view. Fact is, there never(in recent memory) was any total secrecy in Swiss bank accounts. Cooperation existed in criminal investigations, and not just the ones receiving “terror linked” heading. In cases of drug related money laundering and similar offenses, local Swiss governments would be entitled to some portion of the funds had the account (person) in question been found guilty in whatever jurisdiction brought the charges. Whoever wanted to look into these accounts had to provide some evidence that inquiry was legitimate and not a fishing expedition. As a matter of fact that has been happening to tax cases for some time as well, with a very fine distinction of “tax fraud” rather than “tax evasion”. The armor of secrecy has had many cracks for decades now. On the other hand, it is apparent that even under the new definition of what is protected and what is not, foreign governments will still have to bear some burden of proof before they are allowed access to account information. No matter how loudly both sides of this issue hail it, relatively small percentage of bank customers will be effected. After initial shock, bankers will develop even more creative and complicated  ways to evade or postpone taxation, earning more fees in the process. The cat and mouse game simply added one more level of complexity.
At about the same time SNB dumped Franc on the open market, pushing it down. Was there a connection between these two events? One of comments to the last post suggests that Swiss government compensated bank customers for breach of trust, by telling them to dump Franc in favor of Euro and then stepping in forcefully. Nice gift. Personally I don’t know in there was a direct connection, but surely one has influence over the other on some fundamental level. This observation is, however, useless from trading perspective, so here is a look at one of the CHF charts.

Per press release, intervention’s main objective was to weaken CHF against the EUR. In a true fashion of Swiss secrecy, SNB failed to disclose what is next. Are they going to defend certain level, say 1.4500? What is the target of their action? Continued depreciation of Franc over time? What is satisfactory rate for them, 1.6000 or 1.7000? We must understand that central banks are not in a business of making life easy for speculators, so not too much will be revealed. It is always possible this was a politically motivated action, in response to situation described above, but it is unlikely. Realistically we should expect farther selling by SNB on any sign of Franc strength. Since we know next to nothing about their intentions, the best tool available is the chart. Including the intervention, EUR-CHF swung up 800 pips in a week. This is unlikely to continue without some pull back. Personally I like the 50% retracement area, which happens to be around 1.5000 level and has couple of other things going for it, too. I will be looking for reversals on 1H charts there. Should the price make new highs before any pull backs, my plan is to go long GBP-CHF above the high.
Speaking of the Pound, here is another trade I’m looking at.

It would appear GBP-AUD is trying to turn bullish. So far the effort is not paying off, but it has potential. I placed couple buy orders here for now, one for breakout, one for range play. I will watch this closely, because if the price contracts even more later today, buy above 2.1400 might be in the works. It will depend on how the chart looks.
Still have couple of trades riding from last week and looking for opening gaps. After the G20 meeting we can expect some bombastic statement about “united front” and “stronger cooperation”, something markets will have to digest, but I don’t think they will cause any surprises.

Mike K.