Here is my idea. I am looking to go long EUR (waiting for 1.20-1.25 area). But with that trade there is a risk of eurozone SHTF. But, since CHF is pegged to EUR it is the the same if I go short USDCHF. I guess if the SHTF in eurozone CHF will de-peg (I expect CHF to de-peg in 2012 anyway).
What do you think?
I think that when the SHTF the EURCHF peg will be thoroughly tested.
I do think that as the value of the CHF is being artificially manipulated downwards now, a sudden violent correction *should* be in the upwards direction.
BUT, there have been rumblings from the SNB about 1.20 not being low enough, and that 1.25 might be a better level, so being long expecting a move in one direction and another sudden CB intervention in the other direction wouldn't be much fun on leverage.
I am tempted to go and change a few thousand Euros into CHF and wait on a longer timeline for reality to reassert itself, but doing it on leverage via Forex, probably not so much.
so with regards to short USDCHF, long term I think you'll be right, but can you stay solvent in the meantime?
Interesting article here
Red Pill: staying solvent is not a problem. I don't use extreme leverage. Most of the time I simply buy (or sell) 1 year options and liquidate when the price is right. That way I don't have to worry about margin calls and stuff like that.
I don't believe EURUSD will go below 1.20 this year. USA will just print if it falls close to 1.20. I just read an article today, that exports here in Slovenia (we are just a German sattelite basically) and Germany have risen significantly. Low euro is already showing a positive effect on EU economy, so the opposite must be true in the US.
That is why I think US will not allow the dollar to rise so high.
But I could be wrong, that's why I like to use 1 year options. They give me enough time to be right eventually :).