The dollar of Canada and the franc of Switzerland (CAD/CHF) isn’t the main instrument among the currency pairs, but it can be characterized as having low liquidity.
The economy of Switzerland isn’t a great one. In 2017, it accounted for 679 billion dollars, which was just ¼ compared with Canada (1.65 trillion dollars). The countries can’t directly cooperate in terms of trade.
The Swiss economy is influenced by luxury stuff export, tourism, and money operations. At the same time, Canada plays a vital role in the export of natural resources and products.
What influences both governments much. Switzerland is thought to be reliable when speaking of finances. It’s not surprising because it owns one-third of the private capital worldwide. So, it can be considered to be the chief financial storage in the world.
The Canadian dollar has characteristics of a product currency with more significant interest rates and changes. However, as long as Canada faced a considerable recession with a non-relevant negative outcome, the situation can change.
The Bank of Canada (BOC) controls financial policy speaking of the Canadian dollar. It tries to hold the inflation at the figure of 2%, the medium point within the window in the limit of 1% – 3%.
As of Switzerland, the Swiss National Bank (SNB) takes charge of the financial policy in the country. It works very hard and strives to reach financial stability.
Even though it’s not allowed, the SNB will intercede to hold the discount rates within the determined levels so that to help the export and economic spheres connected with money.
Such interferences can have a positive or negative influence on the currency, but the bank thought the currency was too strong for plenty of years and interfered with making it more feeble regularly.
The BOC has meetings every half a year to decide on the financial policy. At the same time, the Swiss National Bank has such meetings just four times a year.
CAD/CHF is generally looked at as a tool for the transfer of products, with interest rates in Canada significantly bigger compared with Switzerland. It allows bringing more liquidity to the pair without much variability with a bias toward technical data.
The reasons for changes in the pair are frequently explained by the economic issues that negatively influence the Canadian side, such as alterations in the product prices (as long as it’s Canada, which chiefly exports oil to the US, it impacts the economy the most).
Economic unsureness doesn’t just lower production costs but also raises interest in safe havens such as francs. The US is Canada’s chief trading partner. Therefore, all the changes in the world economy will affect the currency pair.
One of the characteristics that bring so much popularity to the franc is the fact that about ¼ of the currency is backed by gold. However, it provokes a strong effect of the changes in gold prices on the money itself.
As a whole, the pair is rather stable. However, the economic changes can lessen such stability. It happens mostly when oil demand jumps or drops (once or twice in three-four months). This economic indicator is the most relevant for the traders.
In the short-term perspective, it’s possible to obtain a profit on a CAD/CHF pair when money statements of Canadian enterprises, as well as employment data, is published.
With a dropping trend, the dollar of Canada will also fall, which will take from a couple of days to a few weeks. But finally, the situation will level out, and the pair will have its natural discount rate.