The CHF.JPY currency pair compares the Swiss franc with the Japanese yen. Although these countries and their economies are very different, some similarities affect the cost of currency exchange.
For example, both Switzerland and Japan are small countries with limited resources, and they rely heavily on imports and exports for their economy to flourish.
However, Switzerland is a country with tight economic controls, and the Swiss are keeping inflation, unemployment rates, and other factors in check. They have earned the reputation of European bankers.
Japan’s economy is built on high technology and computer technology. Just look at the hybrid car industry with Toyota Prius and other products to see the power of their development.
Since both economies are dependent on exports, they are affected by the state of the global economy, and in particular by large customers such as the United States and Europe.
The largest Swiss customer is Germany. Most of Japan’s products are purchased by the United States. Accordingly, 80% of the total production of hybrid cars is sold in the States.
Before placing a spread on CHF/JPY, you should carefully monitor market movements for several weeks so that you can feel the volatility at different times of the day.
It is necessary to include volatility in the trading plan, since this is relevant to determining the size of the bet, especially when considering where to place the stop loss.
Market’s mood with this currency pair can be determined using technical analysis and the construction of various indicators, such as moving average convergence-divergence (MACD), which works well with this pair.
How to trade
The CHF/JPY pair is not perceived by traders as the most popular. This is primarily because Switzerland is realizing its economic potential by attracting foreign investment, and the Japanese economy is built on high-tech trade.
For traders, this means that both currencies will rise or fall the same way in most cases. With a stable market situation, Japanese companies and their trading partners will profit, part of which will be hedged at the expense of the Swiss franc.
This makes this pair low volatile, but its liquidity cannot be called too high. Nevertheless, trading CHF/JPY is possible and even with a fairly high margin.
For this, trading hours after the publication of the latest financial news in Switzerland, the USA and Japan are used. This data can cause temporary fluctuations in the exchange rate that experienced traders use for scalping.
Most of the economic data on the eurozone and Switzerland are published in the United States from 2:00 to 5:00 Eastern time. The time interval of 30 to 60 minutes before these releases and one to three hours after that distinguishes an extremely popular period for trading CHF cross rates because the news flow will affect at least three of the four crosses. It also intersects with the approach of a trading day in the United States, which attracts a significant amount of investment on both sides of the Atlantic.
Economic releases in the USA usually occur at 8:30 a.m. and 10:00 a.m. EST and also generate an extraordinary trading volume for CHF, with high chances of trend movement in the most popular crosses. Japanese releases receive less attention because they are released at 16:30. and 10:00 p.m. ET, in the middle of the sleep cycle of the Eurozone and Switzerland. Despite that, the trading volume of CHF/JPY may increase sharply around these time zones.
CHF trading charts roughly follow the hours of the exchange, increasing activity when the stock markets of Frankfurt and New York and Chicago futures and options are open for business. This localization leads to an increase in trading volume around midnight on the east coast of the United States, lasting all night until the lunch break in the United States when activity on the Forex market can drop sharply.