BEST TIME TO TRADE THE SWISS FRANC
The Swiss franc is one of the major currencies in the world today. Many forex traders speculate on its strength and weakness through many currency pairs, specifically the EUR/CHF, USD/CHF, CHF/JPY. and GBP/CHF. The currency, known for offering short- and long-term trading opportunities, the currency had little importance before the Swiss National Bank abandoned the 1.20 per euro cap in January 2015.
However, the cap removal led to sharp rise in volatility and the currency’s surge. Brokers and traders incurred hefty losses. Since then, the franc and the SNB actions have become game changers in the currency market.
When is the best time to trade the currency? The Swiss franc trades continuously from Sunday evening to Friday afternoon. But volume and volatility can fluctuate greatly in every trading day like in other currencies. Be mindful of the three factors when trading the Swiss franc: price catalysts, economic releases, and the stock exchange hours.
SNB meetings are one of the major catalysts. The Swiss central bank meets four times a year to discuss monetary policy. They release a statement at 3:30 a.m. Eastern Time after each meeting. Aside from that, the CHF crosses are susceptible to any economic and political macro events. For instance, the yuan devaluation in August.
Most Switzerland and eurozone economic data are issued between 2:00 a.m. and 5:00 a.m. ET in the United States. Normally, US economic reports come between 8:30 a.m. and 10:00 a.m. Such releases result in significant trading volume. However, any releases from Japan garner less attention since the figures are issued at 4:30 p.m. and 10:00 p.m. ET, the middle of the eurozone and Switzerland sleep cycle. But the CHF/JPY trading volume can sharply spike around those time zones.
Forget not meetings of the world’s major central banks as it can change the activity cycle. The Federal Reserve releases their interest rate decision or the minutes of their last meeting at 2:00 p.m. ET. The Bank of England announces their rate decision at 7:00 a.m. ET. The European Central Bank follows suit at 7:45 a.m. The last two releases take place in the dead center of high volume CHF activity.
Trading the currency follows exchange hours, increasing activity when the Frankfurt and New York stock markets and the Chicago futures and options markets are open. This leads to greater activity around midnight on the US East Coast, continuing through the night and into lunch time.
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