The problem is related to electrical interference from the power supply
(see http://superuser.com/questions/76649/laptop-touchpad-works-
incorrectly-when-on-power-supply). As suggested by users here,
increasing the noise threshold helps.

In my case, this problem happens because I am using a cheap ebay power
supply that was not manufactured by my laptop's maker.

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https://bugs.launchpad.net/bugs/1028617

Title:
  Cursor shakes violently when connected to power source - makes
  touchpad cursor unusable

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