- The British pound initially did rally against the Swiss franc, but it has given back a little bit of gains.
- Part of this could be the fact that the unemployment rate in Switzerland was a little better than anticipated.
- Not massively so outperformed by a tenth of a percent. But it could also be that we are just simply stuck in a range.
This range has been fairly obvious for a lot of traders, save you have the ability to babysit your positions, you probably have done well going back and forth.
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The Range
The 1.1350 level seems to be a bit of a ceiling. And somewhere around the 1.1150 level begins support down to the 1.11 level. So, in this environment, I think you just have to assume that the range continues. The Swiss franc had strengthened against most things during the day, so that makes sense that we would see the same here. Range-bound traders could look at this for a potential buy on the dip opportunity closer to the 1.11 level, especially if the stochastic oscillator gives you that same signal. This is a very noisy market, but I do favor the British Pounder of the Swiss Franc, all things being equal, mainly due to the swap differential. It is a carry trade if you hold it to the upside.
If you short it, then you are paying a bit of interest. And I always try to avoid that if I can. However, if we get a sudden risk off type of move around the world, that will favor the Swiss franc. And let's face it, there are plenty of reasons to think that could happen. So, with that being the case, I'd be very cautious. I wouldn't put a ton of money into a particular trade yet, but range bound back and forth trading has worked out quite nicely in small increments.