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September 8, 2022

Why CHF Might Be Underrated

Michael J. Donoghue
CHF Might Be Underrated

Forex traders had a fair bit of news to chew on this morning. All eyes were on the European Central Bank as they implemented an anticipated 75 basis point rate hike followed by a press conference, after which the world was treated to yet more commentary from Fed Chair Powell. Perhaps sliding under the radar was positive labor market news for CHF, with Switzerland’s unemployment rate beating expectations by falling to 2.1%. This joins a long list of reasons to consider going long on the Swiss Franc, as CHF might be underrated.

The Swiss Economy’s Strength

Switzerland boasts many economic factors weighing in its favor, including its hot labor market, CHF’s safe haven reputation, and GDP growth in spite of a recession-prone global economy. In many ways it is comparable to Japan’s economy, as both are high performing, export-heavy economies that are historically comfortable with negative interest rates due to low inflation relative to other countries.

However, one crucial difference between the two in terms of fundamentals is that the Swiss National Bank has proven willing to hike interest rates recently, whereas the Bank of Japan has thus far put off such a move. With Switzerland’s annual inflation still creeping up, currently hovering at 3.5% (a thirty-year high), more tightening could potentially be on the menu.

Best CHF Pairs to Trade

According to the EdgeFinder, A1 Trading’s market scanner tool, the following three pairs may be worth selling for CHF bulls. Here are the pairs, along with their respective EdgeFinder ratings:

1) GBP/CHF (Earns a -6, or ‘Strong Sell’ Rating)

CHF Might Be Underrated

2) NZD/CHF (Earns a -6, or ‘Strong Sell’ Rating)

CHF Might Be Underrated

3) AUD/CHF (Earns a -5, or ‘Sell’ Rating)

CHF Might Be Underrated

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