Trading The Swiss Franc – What To Know

Switzerland’s currency, “the franc” plays an important role in the international capital markets.

Due to Switzerland’s history of political neutrality and reputation for stable and discrete banking, the Swiss franc is generally looked upon as a safe haven in international capital markets.

During times of international turmoil investors often flee to the safety of the Swiss franc. For that reason, when volatility rises in the financial markets  ( have you checked volatility as of late? ) , investors often bid up the Swiss franc at the expense of other currencies.

I rarely trade CHF as the Swiss National Bank is notorious for “forex market intervention” and have “on numerous occasions” entered forex markets with massive sales / purchases in order to keep the currency under control.

We are living in desperate times and in turn, desperate actions “may be required”  – in order to survive. I strongly encourage all of you to do a bit of research, in order to better understand the Swiss Franc and it’s role in global currency trade.

To make a long story short The SNB has scared the bejesus out of speculators so many times in the past ( as to keep the currency from rapidly rising ) that it’s become the “two-headed step child” of the currency market for years. Massive interventions ( as the SNB has close to as much money as god ) have allowed the Franc to stay at a manageable level but…….as we are living in desperate times…..get an eye on it. 

Trades “short commods” and “long CHF” would also make sense moving forward ( however dangerous to the novice ).

6 Responses

  1. rolo October 11, 2013 / 1:22 pm

    Great Blog and ideas Kong thanks – re CHF there is the EUR/CHF peg of course ….

    Switzerland keeps commitment to defend euro-franc peg
    Posted on: 19 Sep 2013 by Louise Newman
    The Swiss National Bank (SNB) held a monetary policy meeting on Thursday and concluded that the Swiss franc is still high.
    It decided to reaffirm its minimum exchange rate of 1.20 Swiss francs per euro and to keep its target range for the three-month LIBOR at 0-0.25%. As expected, the decision marks no change in monetary policy.
    Although the euro has drifted higher from the 1.20 ceiling set in September 2011 due to the risk of deflation and a recession, the central bank has decided to keep its peg unchanged. Following the decision, the EUR/CHF was trading at 1.2330.

    So it should move in line with EUR if the Swiss are happy to import inflation on a EUR weakening [ is that deflation on a EUR strengthening ?]

  2. JSkogs October 11, 2013 / 2:11 pm

    Thanks for the posts this week, Kong. Didn’t make many trades this week. Traded some es long futures and audjpy long. Going to cash for the weekend. Starting to eye up a GBPUSD short, EURUSD (don’t hate me) short and obviously the commods….just don’t know what yet. Probably yen long reloads early next week and maybe some es short trading. Starting to watch gold for a possible add.

    Enjoy your weekend! Turkey and habaneros for you?

  3. JSkogs October 11, 2013 / 2:24 pm

    Kinda thinking the possible yen rally and spx sell off next week could be somewhat stellar. The set ups are starting to look pretty juicy

  4. Power Corrupts October 11, 2013 / 3:17 pm

    thanks Kong! it’s my understanding strong CHF vs $ has a positive correlation to the gold price in $… did a little bargain hunting in the pm miner patch this week – i’m an investor not a trader

    • Forex Kong October 11, 2013 / 3:58 pm

      Yes sir!

      I’m eyeing the miners as well. If USD is rolling here – it could mean a nice move in the metals.

      • Forex Kong October 11, 2013 / 3:58 pm

        That’s where I’m at Jskogs.

        Good eye ma man.

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