Rhody Trader

Once upon a time central banks intervened in the markets to keep currency exchange rates in line. Even the hint that one of them was in oftentime was enough to get rates jumping. That’s become less and less frequent of an occurance over the years, though. The Bank of Japan probably has the most active record of intervention and got quite good at timing it.

These days the perception is that the markets are too big – that the central banks just don’t have the resources (especially working alone) to move exchange rates the way the did in the past. To push prices around these days requires concerted intervention.

Well, maybe not always.

The Swiss National Bank (SNB) has decided to take the bull by the horns (so to speak) and intervene in the CHF. It did so a while back, mostly in EUR/CHF if I remember correctly. Today, though, the target was USD/CHF. They were said to have been in early in the US session and then around midday, the end of the European session. The intraday chart below shows the result.

Most retail traders don’t really focus on the CHF, so it’s quite likely that many never saw what happened. The SNB action, though, played a big part in driving the USD higher early today, which showed up in places other than USD/CHF, and then again around noon. The moves in EUR/USD, USD/JPY, etc. were not of the same magnitude, of course, but perforce when a lot of USD buying is happening in one pair it’s going to impact others.

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