AUD/CHF Signals
About the AUD/CHF (Australian dollar & Swiss Franc)
The AUD/CHF pair is the abbreviated term used for the Australian dollar and Swiss Franc (CHF standing for Confoederatio Helvetica Franc, the official name of the country in Latin). Unlike other currency pairs, the pair isn’t famous enough to earn its own nickname yet.
The exchange rate tells you how many Swiss Franc (quote currency) are required to purchase one Australian dollar (base currency). For example, if the pair is trading at 0.7100, it means it takes 0.7100 Swiss Frans 1 Australian Dollar.
Breaking Down ‘AUD/CHF’
The Australian dollar is known as a commodity currency due to the role of Australia in global gold production and export. Aussie exhibits a long-term positive correlation with the value of gold.
Whereas, the Swiss franc, denoted by CHF as a nod to Confoederatio Helvetica, is a reserve currency. Therefore its value surge during the time of certainty as investors seek safe-haven options. The exchange rate of Swiss Franc is also determined by economic factors such as interest rates, trade balance, and inflation, but the price of gold, oil, and coal also tends to be important.
The Australian dollar and the Swiss franc are rated 'majors' of the forex business, as they are the fifth and sixth most-traded currencies.
Currency Correlations
Correlation is merely a mutual relationship or connection between two or more things.
Positive correlation – The positive relationship merely is when pairs move in tandem with each other.
In the forex world, the AUD/CAD, AUDNZD and AUD/USD currency pairs are positively correlated. It's because all these pairs have an Australian dollar in the numerator. So, any change in the Aussie will be reflected in these pairs.
Negative correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, EUR/AUD and GBP/AUD pairs share a negative correlation. It's because the Australian dollar is the base currency and is in the denominator.
Gold & Aussie: One essential characteristic of the AUD is that it has a high positive correlation with gold prices. The reason behind this is that Australia is the third biggest gold producer in the world. As a result, whenever the price of gold rises or falls, the Aussie goes along for the ride. This will ultimately move the AUD/CHF pair in the same direction.
What Determines the AUD/CHF Exchange Rate?
Several factors can impact the AUD/CHF rate valuation, including:RBA & SNB Monetary Policies: Monetary policy for the franc is set by the Swiss National Bank (SNB), which accomplishes its mandate for currency stability by targeting interest rates. SNB can intervene both ways, either to soften or strengthen the currency. Being a reserve currency, it carries a safe haven status which is making currency too strong. Therefore, the SNB is struggling to make it weaker for years now.
On the flip side, the Australian monetary policy is set by the Reserve Bank of Australia (RBA) which is mandated to keep the currency stable, which it does by setting a target of 2-3% inflation.
Economic Events: The movement in the Swiss Franc and Australian economic events determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Australian Dollar or the Swiss Franc, causing fluctuations in the AUD/CHF exchange rate.
Major Economic Events:
Gross Domestic Product – the Gross domestic product is the central measure of economic growth in the region.
Employment Change – Both of the currencies are sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.
Consumer Price Index – Since one of the goals of the RBA and RBNZ is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central bank’s target, the RBA could make use of its monetary policy tools to keep inflation in check.
The balance of Trade – Australia and Canada have an extremely robust trade sector, so currency traders and bank officials alike tend to watch changes in the country’s export and import levels.
Political announcements & natural disasters – Besides the scheduled economic events, the political elections, new systems, wars, terrorist incidents, and natural calamities, etc. can all cause severe variations within the AUD/CHF.
AUD/CHF Specifications
Standard lot Size: 100,000
Mini lot size: 1000
One pip in decimals 0.0001
Pip Value: $10.01
AUD/CHF - FAQs
AUD/CHF can be a good pair trading option depending on the current market conditions. If you are looking for an opportunity to capitalize on both currencies' strengths, then AUD/CHF can be a good pair to trade.
AUD/CHF is suitable for traders of all skill levels. It can be a great way to diversify your portfolio and benefit from the stability of both currencies. The main benefit of trading AUD/CHF is it offers traders the opportunity to benefit from both currencies’ strengths. It is also a liquid pair with low spreads and can be used as part of a hedging strategy. It can also provide traders with an opportunity to capitalize on currency correlations. Like any pair trading, AUD/CHF carries the risk of market volatility. It is important to keep in mind that both currencies can experience significant movements and this may result in losses.
The direction of AUD/CHF depends on the current market conditions. The pair can be either bullish or bearish depending on the economic, political and financial factors affecting both the Australian and Swiss economies. For example, if the AUD is strong and the CHF is weak, then AUD/CHF is likely to be bullish. Similarly, if the AUD is weak and the CHF is strong, then AUD/CHF is likely to be bearish. It is important to keep up with the latest news and events in both countries to gain insight into the direction of AUD/CHF.
The strength of the AUD relative to the CHF is dependent on a variety of factors and can change over time. Currently, the AUD is getting stronger against the CHF due to the strong performance of the Australian economy. The AUD has been rising against the CHF since 2020 and is expected to remain strong in 2021. It is important to keep up with the latest news and events in both countries to gain insight into the direction of AUD/CHF.
A variety of factors can affect the AUD/CHF pair, including economic and political events in both countries, global trade tensions, shifts in investor sentiment and central bank interventions. Additionally, the pair can be affected by changes in interest rates, inflation levels and currency valuations. As such, it is important to keep up with the latest news and events in both countries to gain insight into the direction of AUD/CHF.
The exchange rate between the Australian Dollar and the Swiss Franc is heavily influenced by global economic conditions, such as changes in inflation, interest rates, government policy, and geopolitical events. Additionally, the AUD/CHF pair is sensitive to currency-specific factors, such as changes in public debt levels and economic indicators specific to both countries.
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