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FOREX-Euro leaps after rumour of Swiss intervention

Published 02/04/2010, 11:16 PM
Updated 02/04/2010, 11:18 PM

* Euro jumps from 15-month low vs franc on talk of SNB action

* Traders say unclear if there was intervention

By Kaori Kaneko

TOKYO, Feb 5 (Reuters) - The euro leapt against the Swiss franc on Friday on rumours of Swiss intervention, after earlier plunging to a 15-month low against the franc and tumbling to its lowest level in more than eight months against the dollar.

Traders said it was unclear if the Swiss central bank had actually intervened to buy euros and sell the Swiss franc, although there was talk it had used trading platform EBS.

The euro had dropped to levels which could prompt intervention and the market was wary of the possibility.

The euro jumped to the day's high of 1.4905 francs on EBS after falling as far as 1.4551 francs, its lowest since October 2008, and later held around 1.4730 francs, up 0.6 percent on the day.

"Intervening in these hours is very rare and makes it special, if it's true," said Hideki Amikura, deputy general manager at Nomura Trust Bank.

The euro climbed against the dollar as it jumped higher against the franc, and stood at $1.3721, unchanged from late New York levels on Thursday. It hit $1.3669 in earlier Asian trade, its lowest since late May 2009.

The weakness in the euro was partly attributed to widening yield spreads of Greek, Portuguese and Spanish bonds over German benchmarks..

"The euro remains on a downward trend for the longer term unless there is a convincing prospect of an improvement in the euro zone fiscal troubles and a sense of relief on the euro returns to the market," said Minoru Shioiri, chief manager for FX trading at Mitsubishi UFJ Securities.

The dollar index earlier surged to its strongest in seven months as the euro's fall accelerated its gains.

The dollar index, a measure of its performance against six major currencies, rose 0.3 percent to 80.122 after touching 80.283, its highest since mid-July 2009.

Yen crosses recovered some ground from lows on Thursday as investors trimmed short positions in the likes of the Australian dollar ahead of key U.S. jobs data later in the day.

Traders said there was also some support from yen outflows related to a Japanese mutual fund or "toushin" to invest in Brazilian shares. (Additional reporting by Satomi Noguchi; Editing by Michael Watson)

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