History of the USD/CHF Pair
Trading the US dollar and Swiss franc pair is called trading the “Swissie”. The CH stands for “Confoederatio Helvetica,” which is Latin for Switzerland, and the F stands for franc. The Swiss franc is a popular currency because Switzerland holds approximately one-third of the world’s privately owned wealth in its banks. Switzerland is also politically neutral and has strict privacy laws governing banking.
Trading USD/CHF: What You Need to Know
- It is important to know that the Swiss National Bank (SNB) takes a very active role in maintaining the exchange rates of the franc against other currencies, especially the euro. Using active market intervention, the SNB has capped the Swissie’s value against the euro at a minimum rate of 1.200 CHF per euro. The SNB intervenes in order to lower the risk of recession and currency deflation. The SNB makes interest rate announcements as well as policy announcements every quarter.
- Some important Swiss economic data to follow that influences the USD/CHF rate:
- Swiss Consumer Price Index: this number gives a good indication of the general direction of inflation and reflects the health of the economy.
- SVME: The Swiss Purchasing Managers’ Index (PMI) is a good measure of the Swiss economy and can indicate how the currency values will move.
- Foreign Currency Reserves: Since the SNB is heavy-handed in manipulating the exchange rate, it is important to watch the currency reserves that can be used for this purpose.
- KOF Economic Barometer: 25 economic indicators that predict how the market will perform in the next 2 quarters.
- Economic reports and information from the U.S. also affect the USD/CHF exchange rate. The most important of these announcements include: employment data such as jobless claims, Consumer Price Indices, retail sales growth, interest rate announcements and any announcements from the Federal Reserve, and PMI data.
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