CADCHF is the ticker symbol for the Canadian dollar to Swiss franc exchange rate on the Forex markets. Both the Canadian dollar and the Swiss franc are considered major currencies, but the CAD/CHF is considered a minor pair because it does not constitute the US dollar (USD). Minor currency pairs typically feature lower liquidity and trading volumes compared to major currency pairs. They are also traded with relatively wider spreads. The CADCHF also has carry trade properties. In comparison, the Swiss franc is a low-yielding, stable currency, whereas the Canadian dollar is a high-yielding, growth currency.
In the CAD to CHF Forex rate, the CAD is the base currency, whereas the CHF is the quote/counter currency. This means that at any given time, the price of the CADCHF pair represents the amount of Swiss franc it would take to exchange for one unit of the Canadian dollar (1 CAD to CHF).
History of CADCHF
The Canadian dollar is the official currency of all of Canada, which constitutes 10 provinces and 3 territories. It was introduced in 1858 as decimalized currency, replacing the Canadian pound that used the Sterling system. The move was in part meant to boost local and international trade, especially with Canada’s influential neighbour, the USA. The CAD is considered a ‘commodity dollar’ in the forex markets, owing to Canada’s wealth of natural resources. The country has the third-highest estimated worth of proven natural resources, as of May 2022, and is a leading global producer and exporter of crude oil and natural gas. As a commodity dollar, the CAD tends to swing along with the fluctuations of commodity prices in the international markets. The CAD is the 6th most traded currency in the world and is nicknamed the ‘Loonie’ because of the common image of a loon on its notes and coins.
On the other hand, the CHF is the official currency of Switzerland and Liechtenstein. The Swiss franc has long been considered a safe haven currency, owing to Switzerland’s political and economic stability over the years. It was introduced in 1850, replacing multiple differentiated coins that were separately minted by 13 Swiss confederates at the time. In 1865, Switzerland became part of the Latin Monetary Union alongside France, Belgium, and Italy. At this time, the Swiss Franc had a value equal to the French franc. As of the end of May 2022, the Swiss franc has a value that is almost equal to the US dollar. In 1945, Switzerland became part of the Bretton Woods System, which saw the CHF pegged to the US dollar. When the system collapsed in the 1970s, Switzerland moved to peg its currency to gold until 2000 when the peg was removed via a referendum. In 2011, the CHF was pegged to the euro, but the peg was abandoned in 2015. The CHF is now the 7th most traded currency in the world.
CADCHF Historical Price Performance
The CADCHF pair traded around 0.88 in the early 2000s. It steadily edged higher to print a peak price of around 1.23 by late 2007. The demand for the Swiss franc during the 2007/8 Great Recession saw the CADCHF pair tumble to below 0.88 by January 2009. It would, however, recover to above 1.10 by May 2010. Since then, the pair has largely trended lower, and in mid-2020 during the coronavirus-inspired Great Lockdown, it printed a low below 0.68. As of May 2022, the CADCHF trades around 0.75.
Major Bodies Influencing the CADCHF – CAD to CHF Trading
Here are some factors to consider when engaging in CAD/CHF trading:
The Bank of Canada (BOC)
The BOC is the central banking system of Canada. Some of its roles include targeting inflation as well as ensuring a stable and efficient financial system. The BOC sets rates and outlines its monetary policy eight times a year in January, March, April, May, July, September, October, and December. In extraordinary circumstances, there may be communication from the bank outside the set dates. BOC events have a huge influence on the CAD.
As the national statistics office of Canada, Statistics Canada is mandated to produce and publish objective statistical information about the society, population, economy, and environment of Canada. CAD traders usually watch out for the agency’s indicators such as the Unemployment Rate, Consumer Price Index, Retail Sales, as well as important figures relating to Major Commodities.
Swiss National Bank (SNB)
The SNB is the central banking system of Switzerland. The bank has a stated mandate of ensuring price stability as well as creating a monetary environment that will foster economic growth within the country. The SNB releases its rates and accompanying monetary policy statements quarterly. The SNB is an active central bank that seeks to protect the CHF at all costs and it may hold events outside scheduled dates. These events can heavily influence the CHF.
Swiss Federal Statistics Office (FSO)
The FSO is Switzerland’s national statistics office. It is mandated to provide objective statistical information about Switzerland’s economy, population, and general life. Some of its most important indicators that can influence the CHF include the Consumer Price Index, Unemployment Rate, and Trade Balance.
Correlations can help traders explore unique trading opportunities as well as avoid unnecessary exposure to market risks. The CADCHF tends to be positively correlated with the USDCHF, USDSGD, USDCNH, and USDZAR. The currency pair also tends to be negatively correlated with the CHFSGD, NZDCAD, EURUSD, and GBPCAD.