The Swiss National Bank in recent years caused a stir in the forex market when it pegged its Swiss Franc to 1.20 per Euro. That unnatural peg unraveled, as most do, and caused extreme turbulence in markets when the SNB decided it could no longer maintain that price. With that out of the way, the Franc moves freely again.
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Switzerland is one of a few major countries to employ negative interest rates, having a target interest rate on deposits of -0.75%. That compares to interest rates in the U.S. that are positive — and rising. But such a negative differential has not hurt the Swiss Franc, which is instead supported by safe-haven flows from other European countries. At least for now.
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The Swissie, as the USD/CHF pair is called, is one of the more tame currency pairs this year, having mostly settled in a 2% range from 0.98 to 1.00. That type of range trading can be good for traders, as long as they aren’t looking for outsized moves.
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