HOW TO TRADE FOREX: AUSTRALIAN DOLLAR/SWISS FRANC (AUDCHF)
The AUD/CHF pair represents an intriguing combination of resource-oriented economies and financial stability, uniting Australia, rich in commodities, with Switzerland, a symbol of security and economic prosperity. Trading this pair offers a perspective on how global commodity price changes affect the Australian dollar. At the same time, the Swiss franc responds to its reputation as a haven in times of global political and economic uncertainty. An effective strategy for AUD/CHF involves monitoring Australian economic indicators, especially those related to the export of natural resources, and market movements indicating changes in global risk perception.
The volatility of AUD/CHF can be especially pronounced during commodity price fluctuations and geopolitical tensions, presenting unique opportunities for traders who can anticipate these movements. A detailed understanding of Australia and Switzerland's economic and monetary policies is crucial, allowing traders to navigate this pair with a mix of technical analysis and sensitivity to global fundamental factors.
10 Factors Affecting the Australian Dollar - Swiss Franc Pair
Monetary Policy: Differences in monetary policy between the Reserve Bank of Australia and the Swiss National Bank (SNB) can affect the pair's direction.
Global Risk Aversion: The CHF is considered a haven currency. In times of global uncertainty, the CHF can strengthen against the AUD.
Commodity Prices: As a resource-exporting economy, Australia is affected by global commodity prices, while Switzerland, with a more diversified economy, is less sensitive.
Economic Developments in the Eurozone: Since Switzerland is geographically and economically tied to Europe, economic events in the eurozone can influence the CHF.
Investment Flows: Foreign investment in Australia and Switzerland, whether in the stock market or bonds, can impact the demand for both currencies.
Political and Economic Stability: Switzerland is known for its stability, which can attract investors in times of uncertainty. Australia, while stable, is more susceptible to internal political changes that can affect its currency.
Trade Balance of Both Countries: A trade surplus in Australia could strengthen the AUD, while strong Swiss trade performance could support the CHF.
Geopolitical Tensions: The CHF may appreciate in times of geopolitical tension, affecting the AUD/CHF pair.
Economic Data: Reports on inflation, employment, and economic growth in both countries can offer clues about economic health and the future direction of the pair.
Global Financial Crises: In times of crisis, the CHF strengthens due to its safe-haven status. This can lead to a depreciation of the AUD against the CHF.
Related Assets Influencing the Dynamics of the AUD/CHF Pair
Gold Prices: Influence the AUD because Australia is a major exporter of gold. An increase in gold prices can strengthen the AUD.
Brent Oil Prices: Indirectly affect the CHF due to the Swiss franc's correlation with the US dollar and the global economy, although Switzerland is not an oil producer.
Iron Prices: Influence the AUD, as Australia is one of the largest iron exporters globally. Higher iron prices usually benefit the AUD.
Copper Prices: Influence the AUD due to Australia's role as a significant copper exporter. An increase in prices can strengthen the AUD.
ASX 200 Index: Reflects the economic health of Australia. A higher index suggests a strong economy benefiting the AUD.
SMI Index: Reflects the economic health of Switzerland. A higher index indicates a robust economy, which could strengthen the CHF.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
