Swiss Franc back in business

The Swiss Franc (CHF) used to be one of the most actively traded currencies in the world markets with USDCHF regarded as one of the major pairs. With Switzerland generally being regarded as one of the world’s most politically, financial and economically stable countries. CHF historically traded as a defensive haven.

Starting in 2010, CHF soared against other majors, particularly EUR as a result of being the path of least resistance for capital fleeing the European sovereign. By the summer of 2011, CHF had soared so much for financial reasons that it was seriously damaging the Swiss economy. At that point, the Swiss National Bank stepped in and established a peg of 1.2000 against the Euro. For most of 2012, EURCHF traded right on the peg level.

EUR: CHG CFD - Daily. Source: CMC Tracker

EUR: CHG CFD – Daily. Source: CMC Tracker

Things have changed a lot in Europe over the last year. Treasury yields have been falling for the most troubled countries, indicating that a lot of the fear that things could spiral out of control has gone. Also in recent months, capital has started to move out of defensive havens back into risk markets, shown most clearly by the big declines in gold, silver and JPY. This suggests that some of the pressure on CHF as a safe haven also may be easing. 

Since the start of this year, CHF has been weakening along with other defensive plays. Recently, EURCHF broke through 1.2500, which was defended in 2011. This suggests that the SNB may be changing its view toward 1.2000 from a peg to a floor and appears to be allowing CHF to float freely as long as it stays clear of its line in the sand. 

As more traders start to become aware that CHF is getting back in business, volumes and volatility have been increasing, creating opportunities for traders.

About Colin Cieszynski

Colin Cieszynski, has been a Senior Market Analyst with CMC Markets Canadian office since 2007. Colin has provided trading insights to individual and institutional clients for over twenty years both as an analyst/strategist and investment advisor, with additional experience in investment banking and syndication. Colin tracks economic and market trends for Global indices, North American stocks, commodities and currencies utilizing both fundamental and technical analysis techniques. He has completed both the Chartered Financial Analyst and Chartered Market Technician programs.
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1 Response to Swiss Franc back in business

  1. Michael says:

    Hi there Colin, could you please make your charts that you provide bigger? It is difficult to see it. I find Rick Spooner posts a good size chart by the way… Just an observation.
    Kind Regards

    FX Mike

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