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FX Trading With the Swiss Franc


When you look at FX trading you are going to be told to consider the most commonly traded currencies.  One of these currencies is the Swiss franc.  It is important that you know as much as you can about a currency before you start to actively trade FX with it.  There are a number of points that you have to consider when you look at the Swiss franc, which is also known as the banker’s currency.

An Introduction to the Swiss Franc

Despite the size of Switzerland they have always had a much bigger impact on the financial world than many people would assume.  When you consider the impact they have on the financial industry it is no surprise that their currency is the sixth most traded FX currency in the world.  The economy of the country does not rank as highly as their currency when you look at the GDP, and the currency is not a common reserve currency.

The currency is controlled by the Swiss National Bank, which is the country’s central bank.  The inflation rate that the bank targets, is 2% and the overall management of the currency is seen to be rather conservative.

The Economic Drivers

The overall economy of Switzerland is actually quite small when you compare it to the impact of their currency.  Around 11% of the GDP of the country is made up of financial services.  This is actually less than a lot of FX traders would expect from this banking giant.

The prices in Switzerland are controlled as much as possible, but this has not been the case for the stability of growth in the country.  This country has experienced a lot of turbulence with their growth stability and there are times when their growth has been in the negative figures.  The inflation has been stabilised over the years and the public debt has not exceeded 55%.  This percentage of public debt is where the amount seems to remain.

The rate of unemployment in the country is actually very low.  However, the manufacturing industry of the country is in decline.  There are certain industries where the country is still seen as a leader.

The FX Drivers and Trading

The major economic data that you have to look at for this currency is the GDP, retail sales, trade balance, inflation and industrial production.  These reports will be released regularly and there are many sources that allow you to get this information for free very quickly.  The employment levels and the interest rate should also be considered when you are looking at trading this currency.

If you are looking for a more stable currency to trade then this is the one for you.  A lot of FX traders view the Swiss franc to be the stable alternative to the US dollar, Euro and the British pound.  However, you should not consider this to be a full time alternative because of the limited number of francs that are actually in circulation.  This is used as an alternative is times when there is a lot of uncertainty with the other currencies.




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