USDCHF Currency Chart

USDCHF is one of the most important forex pairs. Both currencies are reserve currencies, and the great contrast between the economies of the two major industrialized nations allows a trader to gauge overall market sentiment much more efficiently

Below you’ll find a live USDCHF flash chart. In this article we’ll discuss the basics of the two currencies, and conclude with a few useful tips on how to trade the pair.

Please Note: Past performance is not indicative of future results.

 

The US Dollar

The US dollar, of course, is the reserve and trade currency of the world, and at least during the heyday of the dot-com boom, it came close to becoming the global currency as developing nations regularly faced crises due to their inability to secure dollar funding with which they would finance the necessary investments for growth. Today the dollar is much weaker than in the past, but it is still the dominant currency in the vast majority of cross-border financial transactions.

The Swiss Franc

The Swiss Franc has been the currency of the Swiss Confederation for about a century and a half. Before then, each canton forming the confederation used to issue its own currency.

It is important to note that until 2000, the Swiss National Bank was legally required to hold about 40% of its assets in gold. Even after the abandoning of the gold standard in the 70s this ratio was kept constant, but today, after sizable sales, only 20 percent of Swiss currency is being backed by stores of the precious metal.

Switzerland runs trade surpluses with most of its trading partners, and had a balanced budget during much of the present decade, so even in the absence of large gold deposits the currency is regarded as a safe haven by many traders and tends appreciate against the Euro in times of turmoil. Due to the large exposures of the Swiss financial sector to the dollar however, the Swiss Franc does not always appreciate against the dollar as volatility rises.

Trading the USDCHF pair

This pair used to rank as an average carry pair with modest profit potential, and above average volatility, on the whole, during the period before the 2007-2009 economic turmoil. At that time the popular strategy involved buying the dollar against the franc, as U.S. rates were relatively high, and U.S. financial sector attracted inflows of Swiss capital accumulated through the large current account surplus. Today Switzerland still runs a significant surplus, and the U.S. continues to attract investment, but the reduced gap between the Federal Reserve and the Swiss National Bank rates implies that the attractiveness of the pair is much reduced. Volatility remains high, however, since traders are still wary that the financial markets are not finished with the rebalancing and deleveraging process. In times of heightened risk sentiment, the CHF will rally, but sometimes the dollar can appreciate, if Swiss businesses rush to close speculative positions and settle debt.

The best way of trading this pair is determining a long-term sceneario and following it consistently. As such, USDCHF is usually not the first choice of scalpers. The pair tends to follow the general trends in the market, and overall dollar sentiment often has a significant role in determining the thrust of the USDCHF market. Markets watch the trade surplus and business sentiment statistics of Switzerland carefully, but attach less significance to consumer surveys due to the smaller size of the domestic economy. By contrast, statistics that relate to current conditions in the U.S. generally have the potential to cause powerful price oscillations.

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