Why is the USD/CHF an important market?
The currency pairing of the US dollar to Swiss franc (USD/CHF rate) is one of the most commonly traded pairs in the foreign exchange market, representing a significant quota of daily trading. It's a pairing which is favoured amongst veteran traders and newcomers alike.
USD/CHF trading hours
The forex market is available 24 hours a day, but UK trading, in particular, tends to get active from 8:00 AM and taper off from 5:00 PM (GMT). Of course, there will be times during the day when this currency pair experiences higher volumes - typically around major market announcements.
History of USD/CHF
The US dollar needs no introduction and is paired to all the main currencies. It dates back to 1792 when the United States Congress created the US dollar as the country's currency. It serves as legal tender in a number countries and is it still regarded as the world’s unofficial reserve currency.
The history of the Swiss franc goes back to the 1700s. During that period, Switzerland had a large variety of different coins in circulation, including a high number of foreign currencies. In an effort to consolidate to a single currency, the Swiss franc was introduced as the principal monetary unit across the country.
Throughout its history, the Swiss franc has often been regarded as something of a safe-haven currency. Historically, there was virtually zero inflation in the franc and, because of legal requirements, a minimum of 40% was backed by gold reserves.
Historical exchange rates USD/CHF:
Factors influencing the USD/CHF
Role of USD
As the most traded currency in the world, the US dollar is affected by a variety of factors. One of the most influential of these are the reports issued by the US Federal Reserve Bank (Fed). This data can help traders understand how the market may change in the future.
The Bureau of Labor Statistics releases Non-Farm Payroll numbers for the US, usually on the first Friday of each month. This data can produce volatility in the value of the USD, and of course, affect the USD/CHF currency pairing.
As with all currencies, economic and political events and occasional crises can play a part in affecting the fluctuations in the exchange rate. News and data about the US economy and politics are constantly available and should be followed to keep up to date with factors which can influence the markets.
Role of CHF
Despite its relatively small economy, Switzerland has very strict banking policies in place which can influence the movement of the price of the franc. This is partly due to the widespread perception of the country’s political neutrality, and for it being a leading force for financial privacy and security.
GDP data is regularly released which details the factors which can influence the CHF. Figures on the trade balance, inflation rates, retail sales, industrial production, employment figures can be scoured for information which could help indicate how the Swiss franc price could move.
How to trade USD/CHF CFDs
An individual can exchange USD?CHF or trade USD/CHF with either a forex contract or alternatively, they can trade a contract for difference (CFD) on a particular currency pair, and speculate on the price difference.
A CFD is a financial instrument typically between a broker and an investor, where one party agrees to pay the other the difference in the value of a security, between the start and end of the trade. You can either hold a long position (speculating that the price will go up) or a short position (speculating that the price will fall). This is considered a short-term investment or trade as CFDs tend to be used within a limited timeframe.
For instance, to trade the USD/CHF currency pair using CFDs, you speculate on the direction of the underlying asset. If you think the US dollar will appreciate then take a long position by buying the CFDs. If you think the US dollar will lose value against the Swiss franc then you would take a short position by selling CFDs.
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Trading on margin: providing trading on margin (30:1 for major forex pairs), Capital.com gives you access to the USD/CHF pair with the help of CFDs.
Trading the difference: by trading CFDs on USD/CHF, you speculate on the rise or fall of its price. CFDs trading is no different from traditional trading in terms of its associated strategies. A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.
All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. For instance, a trader could choose to have USD/CHF analysis and forecasts as a big part of their feed. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.
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For somebody new to the world of the foreign exchange market, it can seem like an intimidating place. However, once you've grasped the basics, trading on Forex is actually quite similar to other markets. There are just a few key differences.
Because there is no central exchange and it is a market driven by the world’s large financial institutions, the volumes can be huge in comparison to other markets. Not only does this lower the overall cost to traders but it also makes entering and exiting trades easy.
A pip is merely the smallest increment of trade in the foreign exchange market. It stands for 'percentage in point.' GBP/JPY is quoted to two decimal points, so a pip is just the lowest amount that can possibly be added to (or subtracted from) this figure.
The simple answer is 'no' – we at Capital.com make money through the bid-ask spread. This is different from traditional trading where a broker would earn commission on every buy and sell that the customer takes part in.