Learning Currency Trading – Part 4: USD/CHF

The symbol USD/CHF stands for U.S. dollar and Swiss franc. It tells us about the number of Swiss Franc needed to buy one US dollar.

About the Swiss Franc, traders say that it happens to be their safest resort in the forex market during the times of political unrest and economic instability. It is regarded by both the newcomers and the old-timers of the forex market to be one of the most reliable currency pair when the volatility of the market is at its highest.

General Facts and Information

Switzerland is not only one of the safest countries in the world, but is also a wealthy nation with an economy that is completely reliable. The Swiss economy is safer than most other nations because of the relatively more peaceful political environment that presents either very little or no problem at all to the economic standing of the country.

Swiss Banks have always been in the news and are said to be the financial reserves for most of the notable personalities around the world. Furthermore, Switzerland has emerged as a safe haven for investors and those who wish to avail the remarkable private banking services offered by the Swiss. In recent years, Switzerland has proven itself to be extremely important and lucrative for investors and bankers.

Also, Switzerland is home to one of the largest consumer firms such as Nestle and other multinational corporations, which enhances the need for increased trade in terms of the USD/CHF. As US happens to be the world power and economic giant, the trade between Switzerland and US is inevitable that continues to strengthen the importance of the USD/CHF as a currency pair.

However, it is to be kept in mind that the USD/CHF currency pair is not as liquid as other currency pairs, especially when compared to the GBP and EUR.

Factors Affecting the Pairs

Interest rate is the preliminary factor that determines the relative weakness and relative strength of the currencies in the USD/CHF pair. A lower interest rate stands for a weaker currency. Conversely, a high interest rate means a relatively stronger currency.

Volatility of the market considerably affects the Swiss Franc, the worth of which decreases with a decreasing market volatility. However, conditions get most favourable for the Swiss Franc when traders anticipate heavy losses in the forex when the major forex players suffer political and economic discontent. The same trend is also applicable to the USD.

The Swiss Franc is more or less tied to the trends followed by the EUR. The trends followed by euro can easily be taken as heralds for the next move to be taken by the Swiss Franc, allowing traders to make large profits. This might, however, not always be the case.

Taking Advantage of News Trading to Make Money While Trading

Especially for the Swiss Franc that follows the trends followed by the EUR, currency trading news are going to be crucial in helping traders to formulate their next move in the forex world to prevent major losses. Economic indicators and forex exchange broadcasts are important in making sure that traders reap nothing but profits.

Articles based on: