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How to Trade the Swiss Franc (CHF)?

Adam Lienhard
How to Trade the Swiss Franc (CHF)?

The Swiss franc (CHF) is the currency of Switzerland and is traded in the Forex market. In this article, Headway experts share what to pay attention to when you want to trade CHF. Learn more about the Swiss franc and trade it on Headway!

How does CHF relate to other currencies?

The Swiss franc (CHF) has relationships with other major currencies in the Foreign exchange market. Here are some key relationships that can have an impact on the Swiss franc and its impact on them:

Euro (EURCHF). The Swiss franc has a strong relationship with the euro due to geographical proximity and extensive trade between Switzerland and the Eurozone member countries. The impact of events and economic data in the Eurozone can be reflected in the movements of the EURCHF currency pair.

US Dollar (USDCHF). The Swiss franc is also influenced by the US dollar. Traders observe an inverse relationship between the US dollar and the Swiss franc, meaning that movements in the USDCHF pair usually tend to be opposite to movements in the EURUSD pair.

British Pound (GBPCHF). The Swiss franc can also be influenced by movements in the British pound. Factors such as economic and political developments in the United Kingdom and their impact on the British pound can be reflected in the GBPCHF currency pair.

Japanese Yen (CHFJPY). The relationship between the Swiss franc and the Japanese yen is another one that traders take note of. The impact of economic and political developments in Japan and Switzerland on the CHFJPY currency pair can affect the value of the Swiss franc.

What else influences CHF? 

Besides other currencies, the Swiss franc is strongly impacted by other factors. Among them are:

Monetary Policy. You should monitor the monetary policy decisions and interest rates set by the Swiss National Bank (SNB). Changes in interest rates and policy statements can impact the strength of the Swiss franc.

Swiss economic data. Monitoring Swiss economic data such as GDP (Gross Domestic Product) growth, inflation rates, unemployment rates, and retail sales is important. Improved economic performance in Switzerland may support the Swiss franc.

Economic events in other countries. We should keep an eye on economic and political events in major countries such as the United States, the Eurozone, Japan, and the United Kingdom. The impact of these events on other currencies may be reflected in the Swiss franc.

Geopolitical events. Geopolitical tensions and global events can have a broader impact on the market and influence the relationship between the Swiss franc and other currencies. Investors and traders often consider the Swiss franc as a safe haven in times of uncertainty, which may lead to its strengthening under such conditions.

How to trade CHF?

When you plan to trade CHF, remember that it is often considered a safe-haven currency, meaning it tends to strengthen during times of market uncertainty or geopolitical tensions. Traders often pay attention to global risk sentiment and events that can impact market volatility.

CHF appreciates because of strong economic data, such as GDP, inflation, employment data, and interest rate decisions by the Swiss National Bank (SNB). Strong economic data or hawkish statements from the SNB can potentially strengthen the CHF. Interest rate differentials between Switzerland and other countries can influence the CHF’s value. Higher interest rates in Switzerland relative to other countries may attract investors seeking yield and lead to CHF appreciation.

Consider the EURCHF pair. The most commonly traded pair involving the Swiss franc is EURCHF. This pair is influenced by factors affecting both the euro and the Swiss franc, including Eurozone economic data, monetary policy decisions by the European Central Bank (ECB), and Swiss economic indicators.

Consider the USDCHF pair. The USDCHF pair is also popular among traders. It is influenced by factors impacting the US dollar and the Swiss franc, including US economic data, Federal Reserve policy decisions, and Swiss economic indicators.

Consider cross-pairs. The Swiss franc can also be traded against other major currencies, such as GBPCHF, AUDCHF, or CADCHF. These cross pairs offer opportunities to capitalize on the relative strength or weakness of the Swiss franc against specific currencies.

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