USD/CHF trading strategy

Switzerland has been neutral on all major wars that occurred in Europe. Because of this traditional neutrality, its currency, the Swiss Franc became the safe haven currency in times of crisis. In fact, there would be spikes in movements of the Swiss Franc in times of geopolitical crises or terrorism activities. The Swiss Franc can be a go-to currency when this kind of activity occurs. Despite of its resistance to inflation, in terms of liquidity it is not a very good one, the Swiss Franc only accounts to 4% of the global trading volume. When trading the Swiss franc, spend more attention on the Euro zone economic activity as this has more influence than the US data. This is because Switzerland has a huge 80% trading activity with its neighbor, the European Union than anywhere else in the globe. The Swiss National Bank is mostly concerned on its currency against the Euro than with the US Dollar. The Swiss Central Bank only intervenes on its currency if it is either too weak or too strong against the Euro. This move benefits local exporting businesses in Switzerland that mainly do business with its surrounding neighbors. Important Swiss economic reports that influences its currency slightly are Central Bank interest rate decision, retail sales, trade balance, PPI, CPI and the unemployment rate.

Behavior

After a long single directional rally, fund managers and traders seems to move in another direction like a herd. This is made evident and justified that the Franc rarely rallies in huge price ranges because of Switzerland’s low inflation rates. This currency pair does not pack a lot of punch in terms of volatility. The British pound and the Swiss Franc tend to share the same characteristics in terms of price movement, volatility, and technical behavior. Looking at the Pound would help any trader to gauge the next movement in the USD/CHF pair.



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