DEFINITION of 'USD/CHF (U.S. Dollar/Swiss Franc) '

The CHF is the abbreviation for the U.S. dollar and Swiss franc (USD/CHF) pair or cross for the currencies of the United States and Switzerland. The currency pair shows how many Swiss francs (the quote currency) are needed to purchase one U.S. dollar (the base currency).

Trading the USD/CHF currency pair is also known as trading the "Swissie."

BREAKING DOWN 'USD/CHF (U.S. Dollar/Swiss Franc) '

The value of the USD/CHF pair is quoted as 1 U.S. dollar per x Swiss francs. For example, if the pair is trading at 1.50 it means that it takes 1.5 Swiss francs to buy 1 U.S. dollar.

The USD/CHF is affected by factors that influence the value of the U.S. dollar and/or the Swiss franc in relation to each other and other currencies. For this reason, the interest rate differential between the Federal Reserve (Fed) and the Swiss National Bank (SNB) will affect the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar stronger, for example, the value of the USD/CHF cross could increase, due to a strengthening of the U.S. dollar when compared to the Swiss franc.

Great Recession and Ensuing Intervention

The Swiss franc is a safe haven currency, meaning in times of market stress or high volatility the franc will appreciate, conversely, in a low volatility market when equities are moving higher, the franc will under perform. The Swiss franc and Japanese yen are considered the two most popular safe haven currency trades. 

During the Great Recession, the Swiss franc appreciated against all major trading partners apart from the Japanese yen. The strength of the currency began to impact the economy, which led to the SNB intervening in the currency market. The SNB attempted to half the appreciation of the franc against the euro. After a number of attempts, the intervention finally failed and in 2014, the franc exploded, rallying more than 25 percent in a few minutes as the SNB essentially gave up.

The chaos caused major disruption in markets with many retailer brokers suffering as their clients were stopped out for large losses that they were unable to fund due to the speed of the decline. 

The USD/CHF tends to have a negative correlation with the EUR/USD and GBP/USD currency pairs. This is due to the positive correlation of the euro, Swiss franc and the British pound.

RELATED TERMS
  1. CHF (Swiss Franc)

    The CHF is the currency abbreviation for the Swiss franc (CHF), ...
  2. GBP/USD (British Pound/U.S. Dollar) ...

    The abbreviation for the British pound and U.S. dollar (GBP/USD) ...
  3. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  4. Swissie

    A slang term for the Swiss franc. The Swiss franc, or Swissie, ...
  5. SIX Swiss Exchange

    Switerzland's primary stock exchange, located in Zurich. The ...
  6. Cross Rate

    A cross rate is the exchange rate between two currencies when ...
Related Articles
  1. Trading

    Is The Swiss Franc A Safe Haven?

    We examine when and why there are runs on Swiss francs.
  2. Trading

    Why Switzerland Scrapped the Euro

    Why did the Swiss scrap its peg to the Euro and what impact will it have globally?
  3. Trading

    The Swiss Franc: What Every Forex Trader Needs To Know

    Find out what you need to know before you start trading the Swiss franc.
  4. Investing

    Making Sense Of The EUR/CHF Relationship

    The strong correlation between EUR and CHF currency pairs is undeniable. Find out what it means for forex traders.
  5. Investing

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  6. Trading

    The Best Hours To Trade The Swiss Franc

    Diverse reporting schedules keeps Swiss franc forex markets active and liquid between midnight and noon U.S. Eastern Time.
  7. Investing

    Defensive Investments for Uncertain Times

    Despite weakness in stocks, there are ways to protect your portfolio.
  8. Trading

    Currency Charts for Traders to Watch

    Bullish chart patterns on these currency ETFs suggest that now could be the time to buy.
  9. Trading

    6 Top-Traded Currencies and Why They're So Popular

    Every currency has specific features that affect its underlying value and price movements in the forex market.
  10. Trading

    Swiss Franc Futures Point To Higher Gold Prices

    As Swiss Franc futures break out to new multi-year highs, gold looks likely to follow along.
RELATED FAQS
  1. How do I open a Swiss bank account, and what makes them so special?

    Due to some special circumstances regarding privacy, the level of scrutiny over providing official documentation of your ... Read Answer >>
  2. How do you make money trading money?

    Trading money, particularly in the forex market, is a speculative risk, as you are betting that the value of a currency will ... Read Answer >>
  3. What are the most common currency pairs traded in the forex market?

    There are many official currencies that are used all over the world, but there only a handful of currencies that are traded ... Read Answer >>
  4. Why is Switzerland considered a tax haven?

    Learn how Switzerland is considered a tax haven, even though its government has signed agreements to disclose information ... Read Answer >>
Hot Definitions
  1. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  2. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  4. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  5. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  6. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
Trading Center