With the Swiss temporarily abandonment their EUR/CHF, we try to draw some early guesses on IMPACT:
1. There will be significant losses in Swiss rates markets amongst banks & clients
2. There will be significant losses in $/CHF positions amongst speculative clients using $/CHF as a EUR/$ proxy
3. In EUR/CHF there will be losses amongst structured & private clients who sold downside optionality short
4. #1 and #2 are likely big enough to create a “risk off” tone as losses are felt and VAR limits shrink: IMPACT SOON
5. #3 could mean that other popular fully funded positions in retail space such as long Gold may be liquidated to fund losses: IMPACT SLOWER
6. This blatant mistake by the SNB (allowing their currency to move 30% at one point) will bring into question our trust of CB’s globally
Those are our first guesses and we very much welcome all other ideas of impact and consequences.