ORIGINAL (9:12 AM EDT): The value of the euro against the Swiss franc spiked just moments ago, rising nearly €0.005 in a matter of seconds.This led investors to immediately speculate that we were seeing central bank intervention, considering the Swiss National Bank’s commitment to preventing the Swissie from increasing in value against the euro.
Other traders have speculated that a fat finger was responsible for the momentary move.
rumours about another round of liquidity provision from central banks may also be leading to some of this volatility, according to ForexLive. According to those whispers, they would intervene with dollar swap lines similar to the ones we saw in November.
Finally, there are other stories circulating about a tax on Swiss bank deposits.
UPDATE: The latest rumour is that a Medley think tank report noted that the SNB is considering other policies to help maintain the currency floor (via @NicTrades). Evidently, that report sparked the idea that deposits at Swiss banks could be taxed (via @ForexLive).
More to come as this story develops.
Here’s what happened to the trade, from DailyFX.com:
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