The financial markets can sometimes be described as creatures of habit so when the market is expecting some type of action and it doesn’t occur, it can lead to a snap-back. This appears to be taking place with the Swiss franc (CHF) today, as so far every Wendesday this month, teh Swiss National Bank (SNB) has “jaw-boned” the Franc lower.
What this means is that they have been out describing things that would potentially do to try to weaken the Franc and so far it has been largely successful. So when they failed to do so this morning, what happened?
Well the markets took this as a sign that maybe the jaw-bonig is over, so the bought the Franc despite the risk appetite in the markets this morning. Should the Franc stregthen further, expect the rhetoric to resume!