The Swiss franc (CHF) ranks fifth in terms of global liquidity, behind the U.S. dollar (USD), euro (EUR), Japanese yen (JPY) and British pound sterling (GBP). Forex traders speculate on CHF strength and weakness through currency pairs that establish comparative value in real time. Although brokers offer dozens of related crosses, most clients focus on the four most popular pairs:
Euro - EUR/CHF
U.S. dollar – USD/CHF
Japanese yen – CHF/JPY
British pound – GBP/CHF
The Swiss National Bank (SNB) capped EUR/CHF at 1.20 in 2011 to limit safe haven inflows in the years following the 2008 global economic crisis. The bank abandoned the cap in January 2015, triggering a sharp increase in volatility and a massive CHF rally. Traders and brokers incurred huge losses after the central bank action, which occurred without warning.
The Swiss franc trades continuously from Sunday evening to Friday afternoon in the United States, offering significant opportunities for profit. However, volume and volatility can fluctuate greatly in each 24-hour cycle, with spreads in the less popular pairs widening during quiet periods and narrowing during active periods. While the ability to open and close positions at any time marks a key forex benefit, the majority of trading strategies unfold during active periods.
Many forex traders focus their attention on the EUR/CHF and USD/CHF crosses, which maintain tight spreads throughout the 24-hour cycle, while multiple intraday catalysts trigger trends in both directions and in all time frames. Long- and short-term swings also work extremely well with classic range-bound strategies, including swing trading and channel trading.
Swiss Franc Price Catalysts
The best times to trade the Swiss franc track the release of economic data, as well as open hours at equity, options and futures exchanges. Planning ahead requires two-sided research because Switzerland and eurozone catalysts can move popular pairs with the same intensity as catalysts in cross venues. Aside from local releases, U.S. economic data has the greatest impact, due to the EUR/USD being the most widely traded forex instrument in the world.
The SNB meets four times per year to update monetary policy, with a statement released at 3:30 a.m. Eastern Time (ET). The meeting had a limited impact during the capping years but can now stands as a major catalyst. In addition, CHF crosses are vulnerable to economic and political macro events that trigger highly correlated price action across equities, currencies and bond markets around the world. For example, China’s devaluation of the yuan in August 2015.
Economic Releases
The majority of eurozone and Switzerland economic data is released between 2:00 a.m. and 5:00 a.m. Eastern Time in the United States. The time segment from 30 to 60 minutes prior to these releases and one to three hours afterwards highlights an enormously popular period to trade CHF crosses because news flow will impact at least three of the four crosses. It also overlaps with the run-up into the U.S. trading day, drawing in significant volume on both sides of the Atlantic.
U.S. economic releases usually come at 8:30 a.m. and 10:00 a.m. ET and generate extraordinary CHF trading volume as well, with high odds for trending movement in the most popular crosses. Japanese releases get less attention because they are issued at 4:30 p.m. and 10:00 p.m. ET, in the middle of the eurozone and Switzerland sleep cycle. Even so, CHF/JPY trading volume can spike sharply around these time zones.
Swiss Franc and Equity Exchange Hours
CHF trading schedules roughly follow exchange hours, increasing activity when the Frankfurt and New York equity markets and the Chicago futures and options markets are open for business. This localization generates an increase in trading volume around midnight on the U.S. East Coast, continuing through the night and into the U.S. lunch hour, when forex trading activity can drop sharply.
However, central bank agendas in other parts of the world shift this activity cycle, with forex traders around the world staying at their desks when the Federal Reserve (FOMC) releases a 2:00 p.m. ET interest rate decision or the minutes of the prior meeting. Bank of England (BOE) issues its rate decisions at 7:00 a.m. ET, while the European Central Bank (ECB) follows at 7:45 a.m., with both releases taking place in the dead center of high volume CHF activity.
The Bottom Line
Four popular currency pairs offer Swiss franc traders a wide variety of short- and long-term opportunities. The best times to trade these instruments are centered before and after economic releases, scheduled between 2:00 a.m. and 5:00 a.m. ET, as well as between 8:30 a.m. and 10:00 a.m. ET. This diverse reporting keeps all cross markets active and liquid between midnight and noon.
