The Swiss franc (CHF) is one of the most important currencies in the forex market. It is the official currency of Switzerland and Liechtenstein, and it is also used as a reserve currency by many central banks around the world. Trading the Swiss franc in the forex market can be both rewarding and challenging.
To make the most of your trades, it’s crucial to understand the factors influencing the price of the currency and the best hours for trading it. This FXOpen article provides a comprehensive overview of the popular pairs that include the franc and lists their optimal trading hours.
Swiss Franc Price Catalysts
There are several factors that can determine the price of the CHF in the forex market. Let’s consider the catalysts that can influence its price movements.
- Monetary policies of the SNB
- Economic data
- Safe-haven status and global risk sentiment
- Other currencies
Monetary Policy of the SNB and Economic Data
The Swiss economy is heavily dependent on exports, particularly in the banking and financial services sectors. Various economic factors such as interest rates, currency interventions, inflation, news, and global trade conditions can significantly impact the value of the CHF.
- Interest rates. In Switzerland, the Swiss National Bank (SNB) is responsible for setting monetary policy, which includes interest rate decisions. When the SNB raises interest rates, the franc becomes more attractive to those seeking higher yields on their investments. The increased demand for CHF often leads to its appreciation. Conversely, lowering interest rates can make the domestic currency less attractive, causing it to depreciate.
- Currency interventions. The SNB is known for actively intervening in the forex market to manage the exchange rate of the franc. The interventions occur to prevent its excessive appreciation, which could harm the export-dependent economy of Switzerland. They can have a sudden short-term impact on Swiss franc FX prices.
- Inflation. Also known as the rate at which the general price level of goods and services rises, inflation impacts the CHF’s value. A low and stable inflation rate is generally viewed positively, as it preserves the purchasing power of the currency.
- Economic data releases and news. Economic indicators, such as GDP growth, employment rates, and trade balance, provide insight into the health of Switzerland’s economy, impacting the domestic currency’s valuations. News can cause sudden and significant movements in the forex Swiss franc exchange rates. Positive economic data can boost the currency’s value and vice versa.
- Global trade conditions. As mentioned above, Switzerland is export-oriented, and the value of the CHF is closely tied to global trade conditions. Trade agreements, tariffs, trade disputes, or changes in demand for Swiss products can increase or decrease Swiss exports and, in turn, the value of the franc.
Safe-Haven Status and Global Risk Sentiment
The stable economy of Switzerland and political neutrality contribute to the reputation of the CHF as a safe-haven currency. The Swiss franc is known for its stability, which makes it a popular choice for traders during times of economic and political uncertainty.
The franc is commonly traded in various pairs, including those with USD, EUR, AUD, JPY, CAD, GBP, and NZD.
Their movement depends not only on the franc but also on the other currency involved. For instance, the behaviour of USD/CHF will differ from that of AUD/CHF, as the USD and AUD are active in different trading sessions, and their movements depend on different factors.
Many traders pay attention to the Swiss Franc Index (SXY) to understand the relative strength or weakness of the franc in relation to other major currencies.
The Best Hours to Trade the Swiss Franc
The forex market can be divided into four major trading sessions: Tokyo, London, New York, and Sydney. The best trading hours in forex typically occur when some of these sessions overlap. The optimal trading hours for the franc within each forex market session will depend on the pair being traded.
For example, the most attractive trading hours for USD/CHF will be different from those for AUD/CHF. Both the volume and the exchange rate of USD/Swiss franc will fluctuate during the trading day as trading sessions alternate. All the changes can be observed on the US dollar to Swiss franc chart. The same goes for other pairs.
The Optimal Trading Hours for the Most Popular CHF Pairs
During the overlap of the London and New York sessions, to be more precise, from 12:00 pm to 4:00 pm GMT, it’s the best time to trade:
During the overlap of the London and New York sessions, from 8:00 am to 12:00 pm GMT, it’s better to trade:
As the London and Sydney sessions don’t overlap, trading of AUD/CHF and NZD/CHF will depend on the region you live in.
Lastly, during the overlap of the Tokyo and London sessions, many traders focus on trading:
- CHF/JPY from 7:00 am to 8:00 am GMT (summer time).
All the pairs discussed in this section can be traded on the modern TickTrader platform that offers multiple advanced features, tight spreads, true depth of market, and quality liquidity.
The Swiss franc is an important currency in the forex market, known for its stability and safe-haven status. When trading CHF pairs, it is critical to consider the optimal trading hours for each case, as these can vary depending on both currencies. By knowing the best times to trade, forex traders make more informed decisions.
If you decide to trade pairs with the CHF, it’s also important to follow the Swiss franc news today. You can open an FXOpen account to start trading and read our blog to stay up to date on global economic developments.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.