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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.
USD/CHF Weekly Outlook USD/CHF edged higher to 1.0118 last week but retreated sharply since then. Initial bias is neutral this week for some more range ...and more » More »
Although 1.0590-85 horizontal-support recently triggered EURUSD's bounce, a downward slanting trend-line stretched since early February, at 1.0635, may confine the pair's pullback recovery and can again drag it towards 1.0590-85. Adding to this, today ... More »
USD/CHF declined sharply from the minor top of 1.01187 on Feb 15th 2017 and declined sharply from that level. It is currently trading around 0.99960. Short term outlook of the pair is still bullish as long as support 0.99297 holds. The declined from 1 ...and more » More »
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