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How to Trade USD-CHF

Your capital may be at risk. This material is not investment advice.
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Written by trading expert:Professional Day Trader
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Short resume:
  • Author of the book Options Trading for beginners
  • Worked in finance in 12 years
  • Got a MBA in Finance, BA, International Business Administration And Marketing
  • Built a solid record of achievements through constantly developing financial markets
  • Traded on the most frequently utilized stock exchanges: TSE, LSE,NASDAQ, NYSE, Euronex Actively managed a 6-9 million dollar portfolio
  • Developed new and innovative trading systems and implemented them during trading hours
Matthew O'Connor is the author on the bestseller Option Trading for Beginners
Option Trading for Beginners - Written by Matthew O'Connor

Trading knowledge in USD-CHF is an essential tool to have for any trader in general, especially the ones who know when to utilise such trades. The entry of the Swiss National Bank into Africa, which made the trade easier for traders in South Africa. The acronym CHF denotes Swiss Franc even though it stands for the rarely used term Confoederatio Helvetica Franc. The currency is officially used in Liechtenstein and Switzerland. The reason why CHF is special is because it is considered a safe haven for most South African traders.

This currency pair helps traders to protect their money and get the best value out of a particular trade, though the spread may sometimes be high. Also, if a South African trader decides to hold CHF, he or she will be dealing with a negative interest rate, which means that the trader will have to pay a Swiss bank for keeping his or her money safely. Negative interest rates are still new in the world, and its main aim is to ensure that traders do not leave money in savings accounts but use it to invest instead.

For a trader in South Africa to be able to know how to trade USD-CHF, it is important to be aware of the economic differences that exist between the Swiss and American economies. Following the news flow of the two countries is critical for any trader to make a profit out of the trade. IQ option analyses the most important news for South African traders so that they can make better-informed decisions before venturing into any trade. The most critical news from the US that influences the trading pattern of the currency pair are:

  • Minutes of Federal Open Market Committee (FOMC) meetings
  • Press conferences and statements
  • Speeches by FOMC members
  • Consumer Price Index (CPI)
  • Gross Domestic Product (GDP)
  • ISM non-manufacturing and manufacturing data
  • Retail sales
  • Non-farm Payrolls (NFP)

Meanwhile, the decisions of interest rate movements in the Swiss economy are mainly made by the Swiss National Bank (SNB). Moreover, inflation and KOF indicator also influence the nature of trade of the Swiss Franc. IQ option also advises traders in South Africa to be aware that the Swiss National Bank (SNB) constantly intervenes in the markets. Therefore, a sudden spike in the market without a valid reason should be a pointer to the presence of SNB.

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Removal of the currency peg

Prior to January 15, 2015, the CHF was on a fixed exchange rate regime, pegged at 1.20 to the euro. Then, the Swiss National Bank decided to drop the peg, thereby causing a lot of problems. A lot of brokers were caught unawares. For a South African trader to know how to trade USD-CHF, it is of essential to understanding that the SNB has a history of being heavily involved in the forex market, hence actively influencing the exchange rate.

During the era of the peg, it was simple to trade the USD-CHF. Nowadays, because the market is more wary of the SNB, there is a weaker correlation between the USD-CHF and EUR-USD. Putting it clearer, if a trader in South Africa had a bullish EUR-USD scenario and IQ option advised a put option in the reverse movement of the USD-CHF, this would be a profitable option automatically, during the era of the peg. However, nowadays, the outcome is more uncertain. Yet, because of the market’s confidence in the Swiss government, the CHF is still considered as a safe haven to park your money.       

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future. In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.
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