Live USD/CHF Chart
USD/CHF is a pair classified as one of the majors because of the high trading volume in the Swiss Franc. Switzerland’s central bank, the Swiss National Bank, has been known to be active in the markets to maintain a neutral currency, but a failure in early 2015 caused the currency to see a 1-day appreciation in excess of 30%.
The USD/CHF pair is often referred to as the Swissy. Alternatively, the pair can be referred to as Dollar Swiss.
The pair had a strong inverse correlation with EUR/USD, as the Swiss National bank attempted to peg its currency against the Euro. Although this failed in early 2015, causing a collapse in the EUR/CHF exchange rate, there still remains loose correlations between the Euro and Swiss Franc.
What Factors Affect USD/CHF Rate?
There are several factors affecting the pair. Although the Swiss Franc is considered a safe haven currency, the US Dollar is also purchased during times of risk aversion, resulting in less correlated fluctuations during times of risk sentiment shifts.
The Swiss National bank tends to be active in the financial markets, and as most traders would rather not fight the central bank, the impact tends to be magnified. Interest rate differentials play a large factor as well since the Swiss National bank has moved to negative interest rates. Because there is still an inverse correlation with EUR/USD, high impact news items out of the Eurozone will tend to have an impact on the USD/CHF pair.
More about the Swiss National bank can be found at their website https://www.snb.ch/en/, the latest press releases and monetary policy updates can be found on their site. For information regarding the US central bank, the Federal Reserve website can be found at https://www.federalreserve.gov/.
When does USD/CHF experience volatility?
USD/CHF volatility is higher during the European open, as well as the European and North American overlap. Switzerland tends to release the fewest economic releases among the majors, and often the pair tends to move on broader US Dollar sentiment and correlations with EUR/USD.
Who Trades the USD/CHF?
As the Swiss Franc trades with less volume than the Euro, and there remains a correlation, the pair generally discourages short-term traders. The spread, or commission, tends to be higher on the pair, and with similar movements in EUR/USD and a lower spread, many traders avoid this currency pair.
USD/CHF tends to gain volume when the SNB has made its involvement clear. Divergences among central banks tend to draw attention to the pair. As an example, following Brexit, the SNB declared that it would intervene in the currency markets. Speculators that expect the Federal Reserve will raise their interest rate would position in the USD/CHF on the assumption that the SNB will sell the Swiss Franc in the event of excess appreciation, limiting their downside.