CHF-JPY
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CHFJPY is the ticker symbol for the Swiss franc to Japanese yen exchange rate in the forex markets. Both the Swiss franc and Japanese yen are considered major currencies, but the CHFJPY is considered a minor pair because it does not constitute the US dollar (USD). Minor currency pairs typically feature lower liquidity and wider spreads compared to major currency pairs.
In the CHF to JPY Forex rate, the CHF is the base currency, whereas the JPY is the quote/counter currency. This means that at any given time, the price of the CHFJPY pair represents the number of Japanese yen it would take to exchange for one unit of the Swiss franc (1 CHF to JPY).
History of CHFJPY
The CHFJPY pair combines two interesting global currencies – a strong European currency and a powerful Asian one. Nicknamed the ‘Swissie,’ the Swiss franc is the official currency of Switzerland, Liechtenstein, and Campione d’Italia. It was introduced in 1850, and despite the euro’s (EUR) domination in Europe, the CHF has held its own and as of May 2022, it stands out as the 7th most traded currency in the world. It has also earned the title of a ‘world safe haven currency’- a currency that can be trusted by investors to maintain or even increase its value during periods of tension or turmoil in the world. Driven by a vibrant financial services sector as well as technology and advanced services, Switzerland’s economy is one of the most open and powerful in the world. It has proven to be very resilient over the years, in both positive and negative conditions. The CHF itself has been on an interesting journey. When Switzerland became part of the Bretton Woods System in 1945, its national currency became pegged to the US dollar. Following the collapse of the system in the 1970s, Switzerland decided to peg the CHF to gold. This peg continued until 2000 when it was abolished, and this is one of the reasons the CHF was trusted as a safe haven currency. The CHF now floats freely in the market, after a Euro-peg established in 2011 was abolished in 2015.
On the other hand, the Japanese yen is the 3rd most traded currency in the world. It accounts for around 23% of daily forex trading turnover, trailing only the US dollar and the euro. The JPY, the official currency of Japan, was introduced in 1871 by the Meiji government, replacing multiple currencies that were minted differently by multiple Japanese feudal fiefs. The different mints would be converted into chartered banks and they continued to mint the new currency until 1882 when the Bank of Japan was formed and assumed full control over the supply of the yen. The JPY has had a turbulent history, and it famously lost a lot of its value in the aftermath of World War II. Its value, however, increased in the early 1970s following the collapse of the Bretton Woods System as well as the ensuing oil crisis. The JPY continued to further appreciate following the 1985 Plaza Accord as well as the asset price bubble in Japan during the early 1990s. A stronger JPY negatively impacted the export-heavy nation, but the Bank of Japan took measures to deliberately weaken the currency. Japan is currently the 3rd largest country in the world by nominal GDP (behind only the US and China), and the JPY is one of the most powerful global currencies.
CHFJPY Historical Price Performance
The CHFJPY pair appreciated from around 60.70 in late 2000 to over 104.40 by mid-2000. This was followed by a sharp drop to below 77.40 in January 2009. There was a period of sideways trending before a rally started in mid-2012 that saw the pair print a peak above 132.40 in May 2015. After a slight dip, the pair turned higher in 2020 and as of May 2022, it trades above 132.70.
Major Bodies Influencing the CHFJPY – CHF/JPY Trading
When engaging in CHF to JPY trading, here are some factors to take into consideration when conducting CHF/JPY technical analysis:
Swiss National Bank (SNB)
As the central bank of Switzerland, the SNB is mandated to ensure price stability as well as set the monetary and financial policy in the country. The bank sets rates and delivery its monetary policy statement every quarter. The SNB is known to intervene even during unscheduled dates to protect the CHF as much as possible. It is the most impactful body for the CHF, and its events are closely monitored by investors and traders.
Bank of Japan (BOJ)
The BOJ is the central bank of Japan. The bank holds monetary policy meetings eight times a year to release its policy statements and rate decisions. There are also scheduled dates for the release of the minutes of the meetings as well as the bank’s own outlook for economic activity and prices. These events can have a massive impact on the value of the JPY.
Swiss Federal Statistics Office (FSO)
The FSO is the national statistics office of Switzerland. It is mandated mandate is to produce and publish objective statistical information about Switzerland’s economy, population, and general life. Some of the key indicators for CHF traders include the Unemployment Rate, Consumer Price Index, Trade Balance, and GDP.
CHFJPY Correlations
Positively correlated assets tend to move in the same direction, whereas negatively correlated assets tend to move in opposite directions. The CHFJPY pair has displayed a positive correlation with currency pairs such as the GBPJPY, AUDJPY, XAUJPY, and NZDJPY. The pair also tends to be negatively correlated with the EURSEK, EURCHF, EURAUD, and EURGBP.
