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Swiss Franc Exchange Rate

The Swiss Franc: Next on our list of forex currencies is the USD/CHF forex trading currency anna This time we are going to look at the secondary currency, the Swiss Franc as we have already considered the US dollar.

Swiss Franc Exchange Rate : Swiss Franc

Stability and safety would sum up the economy of Switzerland. Extremely prosperous, its residents enjoy an extremely high standard of living, often envied by other less fortunate states. Overseas investors view the country as a safe haven due to its discreet and confidential banking system, with the result that money flow into the country tends to increase when world events bring volatility and uncertainty to the markets. Switzerland's main trade partners are Germany, the USA, France and Italy. The country has one of the highest trade surpluses in the world, with major exports including plant and machinery, consumer products and chemicals.

Swiss Franc Exchange Rate : Swiss  Economy

For much of the last century, Switzerland was the wealthiest country in Europe, but during the late 1990's and into the 21st century, the economy started to slow, to an extent where Switzerland now ranks number four in Europe on a per capita basis. More than half the workforce is employed in the banking and financial services sector with the service industry comprising more than 70% of GDP. Switzerland has the lowest unemployment rate per capita in Europe. The Swiss National Bank ( SNB ) conducts the country's monetary policy and its primary goal is to ensure price stability and steady economic growth, and acts wholly independently.  Monetary policy decisions are made quarterly on the basis of a regularly published inflation forecast and implemented by steering the rate of interest for three-month Swiss-franc investments using the three-month Libor. The SNB generally favours a weak Franc in order to encourage money flow into the country.

Swiss Franc Exchange Rate : Factors Affecting Swiss Franc

There are several factors which affect the price movements in the Swiss France. As with the Aussie Dollar, the Swiss Franc correlates strongly with the price movements in gold, since the country is the fourth largest holder of gold in the world. Gold is viewed by many investors as the ultimate safe haven. Secondly, having a generally low interest rate the currency is another favourite for currency speculators in the carry trade. The USD/CHF pair is actually a synthetic currency derived from two pairs, namely the EUR/USD and the EUR/CHF.  If you are trading the USD/CHF then you must pay attention to price moves in the other two pairs as they will strongly influence the USD/CHF pair.

Swiss Franc Exchange Rate : Major Economic Indicators
Interest rates - Naturally these can cause major moves in currency. Often considered a blunt instrument, their effect in the market may last only a few hours or days, before the trend continues unbroken. For long term traders they are an annoyance - for short term traders they represent volatility in the markets and a trading opportunity. One change is rarely announced without others to follow. Currently interest rates are low, providing opportunities for the carry trade. Rates are set by the SNB at it's monthly meeting.
GDP - GDP is a classic lagging indicator and foremost in reporting on the health of the economy as it measures how fast or slow the economy is growing.  As the principal indicator, a strong GDP can be an indication that inflation may be entering the economy, with a resulting increase in interest rates. Figures are released quarterly.
CPI - Consumer Price Index, Another of the red hot indicators that is dissected by the currency and broader markets and measures the change in retail goods and services. The headline figure is presented as a % change on the previous month's figures or on the annual numbers. This is the prime indicator for inflation and is therefore monitored closely by the markets.
Trade Balance - The trade balance indicates whether the country is exporting more than it is importing, a positive trade balance, or importing more than it is exporting which is a negative trade balance. A positive balance will translate to upward pressure on the currency as money flows out of the country, causing greater demand, whilst a negative balance will have the opposite effect. The figures are announced monthly, one month after the reporting period.

OK - only one more to go after the swiss franc exchange rate - let's look at the dollar Canadian currency pair, but because we've already looked at the US Dollar, we are going to look at the secondary currency, the Canadian Dollar


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