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The Swiss franc is one of five Major currencies. However, this isn't because of its trading volumes: USD/CHF accounts for just 4% of global foreign exchange volumes (less then than USD/GBP, USD/AUD or even the USD/CAD currency pairs).
Instead, the Swiss franc acts as a safe haven - a currency that investors turn to as a store of value rather than a source of capital appreciation at times of market turmoil. For example, the Swiss franc appreciated by 15% against the Dollar from 1.1964 on July 1st to 1.3779 on August 11th following the downgrade of the United States' credit rating by Standard & Poor's.
Switzerland's neutrality, stable political system and secretive banking system make Switzerland a popular destination for risk-averse investors. However, the currency's long standing ties to gold also explain its role as a store of value. Formerly, the Swiss National Bank (SNB) was required to redeem banknotes into gold on request. Until 1997, the Swiss constitution required that at least 40% of the currency be backed by gold reserves. Since, a constitutional amendment lowered the threshold to 25% and the bank's gold reserves have fallen. However, the Swiss franc maintains to this day a strong positive correlation with gold. When the price of gold rises, the Swiss franc is likely to appreciate in response.
Unlike EUR/USD, USD/CHF reacted rather violently to the British Prime Minister's announcement. Whilst half of the experts along with the oscillators had expected its fall to the level of 0.9980, in reality the local minimum ended up being 40 points lower. More »
Downside momentum in USD/CHF is a bit unconvincing as seen in 4 hour MACD. But with 0.9999 minor resistance intact, deeper fall is still expected. Current decline from 1.0107 will extend to 0.9812 support and below. Fall from 1.0342 is seen as a ... More »
The USDCHF moved up to the 100 hour MA yesterday not just once, but twice. Then today, the same moving average was tested in the Asian session. Three tests. No breaks. HMMMM. What does that say to you? If resistance cannot be broken, the price goes ... More »
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