CHF, the reference safe haven
The Swiss franc, along with Japanese yen and gold, is one of the three historical safe havens of financial markets. Whenever a geopolitical, economic, or banking event creates global stress, flows redirect to CHF — pushing USD/CHF down (investors selling USD to buy CHF).
SNB's decisive role
The Swiss National Bank (SNB) is one of the most interventionist central banks in the world. It marked Forex history with two major events:
- January 15, 2015: SNB abruptly abandoned the EUR/CHF 1.20 floor it had maintained since 2011. EUR/CHF crashed from 1.20 to 0.85 in minutes (-30 %), wiping out tens of thousands of retail accounts worldwide.
- 2011-2014: SNB printed CHF at scale to prevent franc appreciation, ballooning its balance sheet to over 100 % of Swiss GDP — an absolute record for a central bank.
Current drivers
- Fed vs SNB rate differential: SNB applies historically low rates. When Fed hikes, USD/CHF rises.
- Risk-off sentiment: geopolitical crisis, stock crash → CHF appreciates → USD/CHF falls
- Gold: USD/CHF is inversely correlated with gold. When gold rises, CHF tends to rise too (both being havens).
- SNB announcements: 4 monetary meetings per year, rarer than Fed/ECB → moves often more violent on SNB surprises
Specifics
USD/CHF has a very strong correlation (~-0.95) with EUR/USD: when EUR/USD rises, USD/CHF falls. Consequence: trading both pairs simultaneously is redundant and increases correlated drawdown risk. Pro traders pick one OR the other, rarely both in the same portfolio.