The race to the bottom in the interest rate/bond market continues. This race to zero impacts currency prices in different ways; mostly it has a negative impact. The one currency that may actually benefit from this mad dash is the Swiss Franc (CHF).

Most FX forecasts and trades are expressing both weak global growth due to interest-rate compression as central banks compete continue their race to the bottom. However, the growing constraints on the Swiss National Bank (SNB) make them reluctant to restart large FX intervention. 

Additionally, Trump’s administration focus on currency manipulation exacerbates the SNB's choices.

CHF is the best performing major currency during a Fed easing cycle as incentives for capital outflows from Switzerland are reduced. Meanwhile, nearly 100 basis points of cuts are priced in for US markets. This should continue to weigh on the USD. 


Not to be outdone, the ECB cannot get enough of low/negative rates. Sadly, this insane experiment has done little to rev up the European economy relative to the firepower. 


“The ECB chief this week will lead a policy meeting that’s widely expected to set the stage for a September interest-rate cut and a possible resumption of quantitative easing.”

So given that the 2 largest central banks, The Fed and The ECB are playing the same game, it makes little sense to play the likes of EUR/USD….that merely boils down to picking the least ugly. And while FX trading oftentimes is just that, this comparison is simply too close.

The better bet, in my opinion, is to look for shorts in USD/CHF and EUR/CHF.

Any reviews, news, research, analysis, prices or other information contained in this article is provided as general market commentary, does not constitute investment advice and may undergo changes from time to time. Trading the Financial and Currency Markets 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 to your favor. Before entering trading Financial and Currency Markets, you should carefully consider your investment objectives, level of experience and risk appetite. There is a possibility that you could sustain a loss of some or more of your initial investment and therefore you should not invest money which you cannot afford to lose. You should be aware of all the risks associated with Financial and Currency Markets trading, and in case you have any doubt, rather seek advice from an independent financial advisor. Scandinavian Capital Markets AB, its owners, employees, agents or affiliates do not give investment advice, therefore Scandinavian Capital Markets AB assumes no liability for any loss or damage, including without limitation to, any loss of profit, which may be suffered directly or indirectly from use of or reliance on such information. Scandinavian Capital Markets AB strongly encourages consultation with a licensed representative or financial advisor regarding any particular investment or use of any investment strategy.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD trades below 1.1100 amid fears of US-EU trade war, mid-East flare up

EUR/USD has kicked off the week below 1.1100, close to its closing levels on Friday. Fears of US tariffs against the EU and the fallout from the attack on Saudi oil installations weighs.


GBP/USD slips below 1.2500 ahead of Johnson-Juncker meeting

GBP/USD is trading below 1.2500, off the highs. UK PM Johnson will meet EC Commission President Juncker to discuss Brexit amid reports of progress. Tensions in the Middle-East and uncertainty ahead of the Fed impact markets.


USD/JPY looking to close the bearish opening gap amid risk-off

USD/JPY gapped down to 107.44 on Monday’s open as risk appetite is diminished following the attack on Saudi Arabian oil facilities. The spot now trades near 107.80, aiming to close the bearish opening gap ahead of a big week. 


Forex Today: Oil prices skyrocket after attack on Saudi installation, Chinese economy slows, Brexit talks continue

Here is what you need to know on Monday, September 16: A drone attack on a Saudi oil facility knocked down around 50% of the Kingdom's output and 5% of global production.

Read more

Gold prices shot higher by over 1% in risk-off start to the week

Gold prices have shot higher in the open this week due to the increased tensions in the Middle East following the attack on Saudi Arabia’s oil and gas facilities in Abqaiq which has suspended half of the kingdom’s processing.

Gold News

Forex Majors