- The US dollar gapped lower against the Swiss franc and has had a lot of problems with multiple currencies, but this is one that is particularly interesting.
USD/CHF
The US dollar gapped lower against the Swiss franc and quite frankly has had a lot of problems with multiple currencies, not just this one. That being said, I think this is a market that’s worth watching because quite frankly the Swiss have made it abundantly clear that they are not appreciative of an extraordinarily strong Swiss franc.
However, I would also counter with the idea that this won’t be the first currency pair they watch. The euro against the Swiss franc is the real concern, but don’t get it wrong, the US dollar and how it trades to the Swiss franc is still extraordinarily important because that comes down to international transactions outside of the European Union.
The Swiss National Bank Intervention Risk
The Swiss unfortunately have a safety currency on their hands and people will continue to look at this as a potential place to run. Sooner or later the Swiss National Bank is almost certain to get involved and start intervening, and I think this might be one of the big potential winners.
This market has completely broken a major support level, which is interesting considering I have this sneaking suspicion that the Swiss have been holding this pair up right around the 0.79 level for a while. So, with that being said, I think we need to pay close attention to the 0.79 level. If we can break back above there, I think this is a really good sign that the US dollar is going to hang on.
That being said, despite the fact that this is a market that looks so negative, if I’m going to shoot the shot at a weakening US dollar, I prefer doing a negative US dollar trade against other currencies, for example the Australian dollar or the New Zealand dollar. The Swiss franc is unfortunately too burdened by the potential for intervention out of the Swiss National Bank.
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