Overnight interbank reports say that Eastern European and Middle Eastern central banks were busy on both sides of the market yesterday, with buyers below 1.3080 and sellers emerging 1.3140/50.
The BIS have been an active seller in recent days and I think this might be related to the SNB’s intervention in EUR/CHF. The SNB must sanitise part of their purchases (between EUR 7 and 8 billion) by diversifying about 70% of their total EUR purchases into USD mainly, but also into GBP and JPY. They prefer to do this through the BIS rather than going straight to the market themselves as their credit lines are already pretty full with many trading banks. This EUR/CHF buying and subsequent sanitisation also goes some way to explaining the pressures on EUR/GBP and EUR/JPY over the last week or so.
