USD/CHF - A Report Brought to You by Q8 Trade
The USD/CHF pair enjoys not inconsiderable popularity in the Forex trading world. The pair refers to the Swiss franc (the currency of pricing) needed to buy one dollar (the base currency).
The USD/CHF is considered to be one of the major Forex pairs and is rated as the sixth in the FX market.
The pair refers to the trading of the currencies of the United States of America (US dollar) and Switzerland (franc). The pair enjoys safe havens around the world.
A historical analysis of the USD/CHF
The Swiss franc has been very strong since it was launched in 1850 which helped the pair to rank sixth in terms of volumes in the Forex market as well as the history of large investment links between the United States and Switzerland.
The United States is the first destination for Swiss direct investment and similarly for US investments in Switzerland estimated at $ 129 billion. The United States is Switzerland’s second largest trade partner after Germany with 10% of Switzerland’s foreign trade being the United States, while Switzerland is the United States’ 17th largest trading partner with 1.4% of the US trade.
The Swiss franc is a safe haven currency. In times of crisis, the Swiss franc rises or at least remains stable but the pair has a positive relationship with the euro against the dollar and sterling against the dollar.
In 2011, the Swiss National Bank tried to intervene in the currency market and the franc was pegged at 0.1 per euro but it was abandoned in early 2015 which hit the markets with a major crisis as the euro fell 20% against the Swiss franc.
The US dollar hit its highest level against the Swiss franc at 4.3180 in 1971 while its lowest against the franc was at 0.7213 in 2011.
How is the value of the USD/CHF determined?
The value is determined by the value of the US dollar. If the US dollar is 0.9845 Swiss francs, you need 0.9845 francs to buy $1. Of course, this value changes almost instantaneously over the five trading days.
What makes the USD/CHF interesting to trade?
The pair is attractive because it contains the currency of the Swiss franc which is a safe haven used during times of economic and political crisis and also includes the currency of the world’s largest economy, the US dollar, which accounts for more than half of trading.
The Swiss franc is very popular because of the Swiss currency’s standard cash reserves. Another country, Liechtenstein, uses the Swiss franc as the country’s official currency.
Is USD/CHF trading profitable?
The USD/CHF is considered to be one of the most traded pairs in the Forex market.
- The similarity to sterling: The Swiss franc and the pound share similar characteristics in terms of volatility, technical characteristics, price movements and so on. So the next moves can be predicted well by following the GBP/USD performance.
- Liquidity: It is not as liquid as other pairs such as the EUR/USD, GBP/USD or USD/JPY but it remains among the most liquid pairs with relative clarity in the trading process. Trading in this pair is increasing in situations of political and economic instability so when any problems occur, investors rush towards the Swiss franc as a safe haven.
- Easy to predict price movements: It is also easily able to perform a fundamental analysis of its performance, as we said by tracking the pair sterling against the dollar or follow the economic data from the United States of America and Switzerland, which have a direct impact on the pair.
- Different trading options: Since the pair has good trading volume and price volatility, there are more options you can rely on to trade the pair including ETFs and futures in USD vs. CHF.
- Easy to get information about: The ease of getting information about the factors affecting the pair, as well as charts that show price movements, news, and economic data make it easy to trade in this pair and make profits especially as all the resources are available online.
However, before deciding which currency pair you would like to trade, we highly encourage you to learn more about what would you get from the platform that you choose to trade with and what are the advantages you will be getting from choosing a certain platform over another.
What are the factors affecting the performance of the USD/CHF currency pair?
Reports from the Federal Reserve and the Swiss National Bank are the most important factors affecting the pair’s performance in terms of monetary policy. The SNB is trying to maintain exchange rates and follow certain measures that will curb recession and currency contraction. All Swiss Central Bank data on interest rates and monetary policy should be followed.
Other things that are also most important are economic data from the USA or Switzerland. The pair is affected by the following US data: employment data, jobless claims, PMI data, and retail sales growth.
As for the Swiss data, the weakness or strength of the Swiss economy, in particular, is the performance of the Swiss franc. But the pair is directly affected by these data: Swiss PMI, KOF economic scale and Swiss consumer prices.
Economic crises that occur anywhere in the world can affect the performance of the pair due to investors’ appetite for the Swiss franc which increases its appreciation against the dollar.
Political events occurring in both countries can directly affect the two currencies. The news of the two countries must be followed up on a permanent basis.
In general, there is a correlation between currency pairs against the Swiss franc, the dollar against the yen and the dollar versus the Canadian dollar as any change in the US dollar is felt in all these pairs because it is the base currency.
The USD/CHF is affected by the performance of the EUR/USD pair with either pair rising when the second pair is sold heavily.
How can you trade USD/CHF via CFDs?
Many traders prefer to trade the USD/CHF through CFDs as it increases their ability to speculate on the movement of this pair without actually owning the currency.
Given the size and liquidity of this pair, it is a common choice for many when they consider trading against the differences in the Forex market.
For example, if you decide to trade the US dollar against the Swiss franc and expect the dollar to appreciate against the Swiss franc, you Buy. If you think the dollar will fall against the Swiss franc, you Sell. If your expectation is correct, you’ll get a profit by the price difference.
Let’s make a numerical example:
If the dollar is trading at 0.9625 / 0.9635, and you have expectations that the dollar will rise against the franc, and you bought 100 standard contracts from this pair through CFDs at 0.9625.
After a while, the pair rose 30 pips, and the new price is 0.9655 / 0.9665. You decided to close your deal by selling the 100 key CFDs at 0.9655.
You bought at 0.9625 and sold at 0.9655. The difference here is 30 points. Because you bought 100 CFDs in this pair, your profit is 30x100 = $3000.
The base contract value here is $10,000.
Advantages of USD/CHF trading via CFDs
- Larger opportunities for profit: CFDs offer more opportunities for profit, where you can make profits not only when prices rise, but also when they fall.
For example, CFDs are an agreement for the exchange of price difference. This difference is caused by subtracting the price of the beginning and end of the contract and the difference between them is your profits. If you believe that the dollar will fall against the Swiss franc, you can set short positions on the pair and if your expectations are correct, close the deal by repurchasing the underlying asset. The price difference here is a profit.
- Leverage: The leverage of trade in CFDs enables us to double the value of the amount you trade. A small amount can be deposited and the value of this amount is multiplied by multiplying it by different leverage.
Example: You can deposit by only $100, trading at $3,000, using leverage 1:30.
Note that earnings are calculated on the entire value of the transaction, not just the deposit amount which in turn increases your earnings.
- Risk management: One of the top characteristics of CFD trading is that there is always a way to hedge and protect your portfolio from any negative price movements that may occur.
Example: You are currently trading in the USD/CHF pair. You bought a lot of it but the trading path of this pair is bearish. In this case, you will not lose your money since you can also speculate on a fall in price and profit even in negative price movements which protects your investments.
How to trade the USD/CHF pair with Q8 Trade?
- Select the financial instrument:
Choose the USD/CHF as the instrument you want to trade on. Q8 Trade offers more than 300 financial assets that can be traded mostly through CFDs.
- Select the transaction type:
Do you have high price expectations? Select Buy. If your expectation is that it will decline, select Sell. In both cases, you can make a profit as long as your market speculation is correct.
- Enter the volume:
Enter the number of units you want to trade from this currency pair.
- Manage the risk reduction tools:
You can choose from a variety of risk management tools including Stop Loss and Take Profit orders offered by Q8 Trade. These tools guarantee you to close your deal at the price you select without considering any fluctuations that may occur in the markets.
- Watch your deal:
Follow your deal first, watch it and when you reach your goal, you can make a decision on it.
- Close your deal:
If your transaction is not automatically closed due to profit-taking or stop-loss orders you have set, you can close it when it’s ready.
Why should you trade the USD/CHF pair with Q8 Trade?
- Q8 Trade is always working to provide a safe and reliable trading environment for its traders.
- The trading platform provides leverage to trade in this pair by increasing the amount you can invest. You can deposit a small amount and multiply it by choosing leverage.
- The brand offers newsletters on all aspects of trading in this pair and provides an economic agenda of the most important events and economic events, data and reports that affect the movement of the pair.
- Provides the opportunity to trade the pair through CFDs which makes you achieve profits even in the case of falling prices and not only those that are rising.
- There is no exchange fee since you do not own the actual asset.
- Q8 Trade offers a range of tools to help you decide on your deals including live charts, historical prices, technical analysis, recommendations, and daily news.