Video: The Swiss Gold Vote and the EURCHF

Talking Points:

• On Sunday, Switzerland will vote on a proposal that would force the SNB to increase its gold holdings

• In the most recent opinion poll, 47 percent of Swiss were against the referendum and 15 undecided

• If a 'Yes' vote, the EURCHF won't simply break 1.2000...but a 'No' vote doesn't ensure a rally either

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We have one full trading day left to assess the risk in a EURCHF exposure before Sunday's Gold Referendum vote in Switzerland. Given the Swiss National Bank's primary monetary policy effort is maintaining a floor on the EURCHF at 1.2000 - accomplished by buying foreign currency and especially Euros when that level is stressed - the burden of an increased gold tab can significantly encumber the group's ability to stay its course. However, that doesn't mean a 'Yes' vote will break EURCHF and offer a windfall for shorts. Nor does a 'No' vote inherently lead to a relief rally like the Pound experienced after the Scottish Referendum was voted down. We discuss this important event risk and the EURCHF's scenarios in today's Strategy Video.

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