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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.
The price is in a long-term pivotal area now, and presents an opportunity. USDCHF. There is nothing due today regarding the CHF. Concerning the USD, there will be a release of CPI data at 1:30pm London time followed by a minor speech from the Chair of ... More »
USD/CHF Daily Outlook Intraday bias in USD/CHF remains on the downside for the moment. Rise from 0.9443 could have completed at 1.0342 already, after ...and more » More »
GBPUSD (1.2341): The British pound posted strong gains yesterday, rising from a few pips above $1.2000 to close the day at $1.2400. The gains came as the ...and more » More »
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