Swiss franc and euro relationship counseling

swiss franc and euro relationship counseling

Extraordinary stability of the Swiss franc/euro exchange rate in the past. far, the relation between the two currencies has been remarkably. The franc soared. On Wednesday one euro was worth Swiss francs; at one point on Thursday its value had fallen to just francs. One of most important relationships to understand in the forex market is the one between the Swiss franc and euro. There is a very strong.

The relationship between CHF and gold

There are two main reasons for this correlation. This means that money tends to flow into and out of the US dollar, impacting all other currencies to some extent. However, the relationship between the Swiss franc and euro is even stronger than this. This is because Switzerland is situated directly in the middle of the eurozone, even though it is not part of it. Both the close physical proximity and strong trade ties tend to create a much stronger correlation between the two currencies than is found with other currencies.

swiss franc and euro relationship counseling

For example, strong growth in the eurozone translates into strong growth in Switzerland — creating similar upward pressure on both currencies.

Understanding this relationship is very important when managing risk. However, the correlation means that you will gain or lose on both positions at the same time — compounding your losses or profits.

swiss franc and euro relationship counseling

In general, it is not a good idea because of this to trade both pairs. Some inexperienced traders also think that they can use differences in interest rates to carry out arbitrage with these two pairs — for example, going long on both currency pairs so that the risk is zero, and then pocketing the interest differences between the two pairs.

What You Need To Know About The Swiss Franc

Between and From tothe carry trade strengthened gold and the related Emerging Markets. Switzerland had to digest the bust of the property bubble of the s.

Both Germany and Switzerland decided not to follow the spending rush of the U. Gold versus Swiss Franc.

swiss franc and euro relationship counseling

Gold tumbled only three weeks after the SNB introduced the cap. CHF remained artificially weak and gold outperformed. Gold and Swiss Franc in and That resulted in SNB losses of 13 bln. After the end of the peg, the franc had a light advantage. But inGold started another advance. Reasons for the stronger gold price was the rising oil and the expectation that the Fed would not raise rates less quickly than expected.

On the other side, the SNB continues to depress the franc with FX interventions that are focused on the weak euro.

Trading USD/CHF -

But, similar to the s, gold, German stocks and the Swiss franc are seen as alternatives. German and Swiss engineering and machinery firms have a strong exposure to Emerging Markets and in particular to China.

swiss franc and euro relationship counseling

While Germans concentrate more on machinery and engineering, the Ricardian comparative advantage for Switzerland is the luxury sales to rich clients from Emerging Markets, e.