EUR/CHF

When talking to one another, forex traders often use jargon to request pricing or discuss ideas about the market rapidly. One such example is EUR/CHF which is generally spoken “Euro Swiss” among forex traders using English. This shorthand notation employs the ISO 4217 standard codes to denote the forex rate of the European Union’s Euro against that of the Swiss Franc.

The EUR/CHF Currency Pair

With respect to the currency pair denoted by EUR/CHF, the European Union’s Euro or EUR is the base currency and so appears first, while Switzerland’s Swiss Franc or CHF is the counter-currency and is written in second place after the slash symbol. Among forex traders, this common market shorthand generally refers to how many Swiss Franc are equivalent to one Euro.

In terms of pip values, this standard forex market notation implies that pips in EUR/CHF are expressed in Swiss Franc terms. Hence, if the EUR/CHF rate is currently trading at a rate of 1.4500, then each pip is worth 0.0001 Swiss Francs per Euro. On a 1 million Euro transaction, this single pip value would amount to 100 Swiss Francs or 68.97 Euros at an exchange rate of 1.4500.

Market spreads in the EUR/CHF currency pair can depend on transaction volume and dealing status, but spreads of anywhere from 3 to 5 pips are fairly common in practice. Although the market in EUR/CHF is quite liquid, spreads can widen considerably during major news events and important economic data releases.

EUR/CHF is one of the more highly-traded currency pairs in the forex market, ranking third among the so-called “major crosses” and accounting for a significant percentage of forex trading volume worldwide. The primary interbank electronic trading venue for EUR/CHF is EBS or Electronic Broking Services that was created by a group of the biggest global forex market-making banks.

The Euro

The Euro has the code EUR and the symbol “€” and is the European Union’s official currency that was officially adopted in December of 1995, although trading did not commence until the beginning of 1999 when it replaced the ECU at parity. Euro currency did not come into circulation until the beginning of 2002, and it now ranks as the world’s second most popular reserve currency after the U.S. Dollar.

Furthermore, the Euro is used in five more European countries. Also, some countries on other continents, especially in Africa, peg their currencies to the Euro. Overall, this has resulted in about half a billion people either using the Euro or using currencies with exchange rates pegged to it.

The Swiss Franc

The Swiss Franc has the code CHF, derived from the Latin phrase Confoederatio Helvetica Franc, and is often abbreviated “Fr.” or “SFr.”. It is the official currency of Switzerland, officially known as the Swiss Confederation, and has been used as legal tender throughout that country since the mid-1800’s,

Swiss Franc banknotes are issued by the Swiss National Bank, and they display all four Swiss national languages of German, French, Italian and Romansch. They are printed in 10, 20. 50, 100, 200 and 1000 franc denominations. The federal Swissmint mints coins in denominations of 5, 10, 20 and 50 centimes (also known as rappen in German, centesimo in Italian, or rap in Romansh), plus 1, 2 and 5 franc coins.

In the foreign exchange market, the Swiss Franc ranks fifth among the most-traded currencies, accounting for approximately 7% of trading volume and just ahead of the Australian Dollar. The currency is commonly referred to in the forex market simply as the “Swiss” or “Swissie”.

In terms of its status as a reserve currency, the Swiss Franc currently ranks as the world’s fifth most popular reserve currency after the U.S. Dollar, the E.U.’s Euro, the U.K.’s Pound Sterling and the Japanese Yen.

As far as the Swiss Franc’s primary sensitivities are concerned, the currency’s value tends to benefit from global economic and geopolitical challenges given its status as a safe haven currency. Nevertheless, this status has eroded somewhat after the legal requirement for the currency to be backed by at least 40% gold reserves was ended in May of 2000, which prompted the Swiss National bank to sell much of its gold reserves.