The US dollar is the world's leading currency, the Swiss franc the number one escape and security currency. The USD / CHF currency pair is one of the main FX currency pairs, even if the economic weight of the USA is far greater than that of Switzerland.
Investors who are long in the USD CHF are betting on an appreciation of the USD against the CHF. Conversely, market participants expect an exchange rate change in favor of the Swiss currency if they trade a short position in the US dollar Swiss franc. The exchange rate is subject to numerous fundamental and technical influences. In addition to the economy, monetary and fiscal policy, the general risk affinity on the financial markets plays an important role for this currency pair.
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Trade USD CHF with Forex: Process of a currency transaction
Each currency transaction can be mentally divided into several transactions. If an investor wants to trade a long position in the US dollar Swiss franc, he first takes out a loan in CHF. He then exchanges the liquidity thus provided for USD. The long position in USD / CHF thus consists of a loan account denominated in CHF and an investment account denominated in USD. The margin to be deposited with brokers serves nothing other than to cover possible losses from this business in order to save the bank from default risks. If the investor is correct in his assessment of the market and the USD appreciates against the CHF, the CHF loan can be repaid by closing the USD account without having to spend all of the USD liquidity. The remainder represents the investor's profit.
USD CHF exchange rate in quantity and price quotation
The US dollar / Swiss franc exchange rate is usually specified in the format of the quantity. From the point of view of the base currency (the currency on the "left" in the currency pair), the quantity quotation indicates how many units of the other currency are paid for 1.00 units of the base currency. The price quotation, on the other hand, indicates how many units of the base currency are traded on the market for 1.00 units of the other currency. There is no qualitative difference: The price quotation is the reciprocal of the quantity quotation.
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