The abbreviation USD / CHF stands for the currency pair of United States Dollars and Swiss Franc. It can also be explained as the cross for currencies of United States and that of Switzerland. The value of the currency pair of U.S. Dollar and Swiss Franc indicate that how many units of Swiss Franc are required in order to buy one unit of U.S. Dollars. In this currency pair, U.S. Dollars is the base currency whereas Swiss Franc is the quote currency.
The trade of the USD / CHF pair of currencies is also referred to as trade of ‘Swissie’. The worth of a pair of U.S. Dollars and Swiss Franc will be quoted as One United States Dollars for X amount of Swiss Francs. To explain this with an example, if the value of the pair of USD / CHF is 1.50, it denotes that one will need to pay 1.5 Swiss Francs in order to get 1 U.S. Dollars.
Factors Influencing Trade of USD / CHF
The trade of USD / CHF is affected by all factors which can influence the value of either United States Dollars or that of the Swiss Franc or both, either in respect of one another or in comparison to other currencies of other countries. Due to this, the difference of the rate of interest of Swiss National Bank and the U.S. Federal Reserve would have a direct impact on the value of the currencies of both these countries when they are compared against each other. In case the Federal Exchange arbitrates in the open market in order to improve the strength of the United States Dollars, then the value of the currency pair of USD / CHF cross would increase, as the value of the U.S. Dollar would strengthen in comparison to that of the Swiss Franc.
The Forex currency pair of United States Dollars and Swiss Franc is affected by various factors which exert a direct bearing on the value of U.S. Dollars and Swiss Franc in relation to each other or on any of them in relation to other currencies. The variation of rates of interest of American Federal Reserve and Swiss Bank also affects both the currencies. When the value of U.S. Dollar strengthens in comparison to Swiss Franc due to the intervening of Federal Reserve in the endeavors of open market, then the value of the pair USD / CHF would also appreciate.
The pair of USD / CHF has a negative association with that of EUR / US currency pair and GBP / USD currency pair. This happens as there is a positive correlation of Swiss Franc, British Pound and Euro. The Swiss Franc fulfills the same purpose as that of the U.S. Dollars and is often referred to as the ‘Safe Heaven’. It has been given this name due to the independent policy and the neutrality that is pursued by the country of Switzerland, the privacy of its banking system as well as the isolation of its economy.