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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.
I was right to be cautious as we now have a break below parity. The pair looks bearish and the USD is selling off everywhere. This pair is behaving very similarly to the EUR/USD currency pair, which I prefer as a vehicle to trade against the USD. USDCHF.and more » More »
For the 24 hours to 23:00 GMT, the USD declined 0.41% against the CHF and closed at 1.0015 on Friday. In the Asian session, at GMT0400, the pair is trading at 0.9985, with the USD trading 0.3% lower against the CHF from Friday's close. The pair is ... More »
Market Overview Analysis by NordFX covering: EUR/USD, GBP/USD, USD/JPY, USD/CHF. Read NordFX's latest article on Investing.com UK. More »
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