Again a lot of the action on forex markets in the past 24 hours has centered around the Swiss franc. This fell in early trade yesterday on speculation that the Swiss might either intervene directly or set a floor on the €-CHF exchange rate after the government met to discuss measures to curb the currency’s appreciation. Markets, though, were disappointed as neither of these measures were announced. Rather the Swiss National Bank just boosted liquidity though it reiterated that it would take additional steps if necessary. As a result the CHF regained its ground against the euro. It has, though, again spiked lower against the euro in early trading this morning on talk that the SNB was again adding liquidity through the currency markets.

While firmly within recent ranges, the euro yesterday had another choppy day’s trading against the dollar. It initially rose strongly against the US currency, with concerns about the weakening global environment weighed on the USD. Meanwhile, the euro benefited from an improvement in risk appetite as corporate earnings helped Wall Street higher. However, the rallies in both stocks and the euro faltered. Dovish comments from the ECB’s Nowotny this morning have also been unhelpful and the euro again starts the day trading around the $1.44 level ahead of a heavy US data schedule.

Sterling, meanwhile, hit a three and a half month high against the dollar. This in part reflected short covering as traders who had sold the UK currency following the weak labour market data and dovish MPC minutes were forced to buy back sterling as the dollar subsequently weakened. The minutes of the August MPC meeting showed all nine members voted for keeping rates steady, which is the first time we’ve seen this convergence of views since May 2010. Given the recent data, combined with developments in the global economy, the shift was not that much of a surprise. It would have been more surprising to see both members (Dale and Weale) sticking to their guns and continuing to vote for higher rates.