Yodel-Lay-Hee-Hoooo!

Today will always be known as the day of the “Swiss Surprise.” The Swiss tore the cap off their franc’s valuation in a stunning move that has had traders all around the world scrambling to dump short positions they held in the currency. Some of them fled to gold, fueling a surge there of 2.4%.

As good as that move for gold was, it won’t help put pants on investors who may have lost as much as 20% on their Swiss franc trades.

The euro dived as much as 30% below the 1.20 cap to a record of 0.8500 francs per euro before bouncing off its session low. The dollar sank to 0.736 francs, its lowest since 2011, before also paring losses.

We have been mentioning volatility as a guiding hand on the markets’ direction. The Swiss move only adds strength to that hand.

Intriguingly, the U.S. equities exchanges were the only ones down today. Europe and Asia were up rather dramatically. Shanghai performed particularly well.

U.S. equities were again hurt by another drop in crude oil. It seemed earlier in the week as if crude was finding some support. That was short lived. The ripples are already flowing through the U.S. economy in the form of layoffs and reduced spending by those who have become unemployed in the oil patch. Theirs are (or were) good jobs that pumped beaucoup bucks into local economies. Ripple, ripple.

A dollar that grew stronger against the euro was little help in stemming the rise in gold prices. In regular trading the yellow metal is up almost $33 on the day.

Although the higher franc is a double-edged sword for the Swiss – it will hurt exports to the EU, in particular – the cap removal is a long time coming and another cautionary lesson in heedless state involvement in markets.

Speaking of swords, there is the imminent European Central Bank’s easing policies to contend with. Gold has benefited from years of increased liquidity following the 2008 financial crisis, but even more monetary stimulus in the euro zone could result in a stronger dollar and in turn lower gold prices.

"This is happening a week before the ECB meeting, which could add even further pressure to the euro ... more QE in the euro zone is a double-edge sword for gold in dollar-denominated terms but gold in euro terms should benefit,'' Saxo Bank senior manager Ole Hansen said.

Wishing you as always, good trading,