Major volatility on SNB Peg

Today the market experienced major volatility especially with the Swiss Franc that saw the pair move 700 pips in a matter of minutes on most pairs.Most traders I believe were caught unawares considering that despite the threats by the SNB to act on the strength of the Franc it continued to gain strength even after the last week. They however decided to peg the currency.At approximately 8.00 GMT they announced that it they would set a minimum ex`change rate of 1.2000 Franc per Euro,citing the massive overvaluation of the Franc.

This announcement sent the market crazy with the Franc selling off by 700 pips in most pairs the USD being the largest gainer of them all.Most pairs moved much higher only to sell off later such as the Euro/Usd which gained more than 200 pips before plunging back down.The Eur/Jpy and the Gbp/Jpy also moved higher only to ease off and plunge to where they were before the volatility began.

The RBA also stood firm with its 4.75% rate as is growth prospects remained dovish. This however did not dampen the Aussie which moved higher against most pairs especially the NZD that has seen a bullish momentum from the beginning of the week. With no mention of a rate cut as expected and less dovish comments the Aussie seems to remain choppy with most pairs on the short term as we await to see how the Euro and US problems continue to unfold.