26 Feb 2021 23:32
CHF/CZK is not a very popular currency pair on the Forex market. CHF/CZK is the cross rate against the US dollar. Although the US Dollar obviously is not present in this currency pair, it still has a significant influence on it. This can be seen, if you combine two charts: USD/CHF and USD/CZK. Thus, you can get an approximate CHF/CZK chart.
The US dollar has a significant influence on both currencies. That is why it is necessary to take into account the major US economic indicators in order to forecast correctly the course of this financial instrument. These indicators are as follows: the discount rate, GDP, unemployment rate, Non-Farm Payrolls, etc. It is necessary to note that discussed currencies could respond with different speed on changes in the US economy, therefore the CHF/CZK currency pair may be a specific indicator of these currencies changes.
The economic situation in Switzerland remains high for several centuries. For this reason, the Swiss franc has a reputation as one of the world’s most reliable and stable currencies. The Swiss franc, or Swissie, is also a kind of safe haven for capital investment during the crisis. Therefore, in times of crisis, when capital is urgently forwarded to Switzerland, the Swiss franc rises sharply against the other currencies. Trading this currency pair, you have to take into account this feature of Swiss economy.
The Czech Republic is one of the most advanced industrialized countries of central Europe. The country is one of the most prosperous and stable among all the countries of the region. Czech Republic has a high rate of personal income, due to a high level of economic development.
The main sectors of Czech Republic economy are: engineering, iron and steel production, chemical industry, electronics, brewing, and agriculture. The most developed economic sector is the automotive industry. Czech Republic has one of the world’s highest rates of car production, most of them are exported. In addition, the Czech Republic is one of the leading exporters of beer and shoes. In addition, significant portion of Czech export is derived from chemical industry: tires, synthetic fibers, etc. The main trade partners of the Czech Republic are Germany, Russia, Slovakia, and Austria. The Czech Republic is one of the leaders in Europe in sphere of electricity production, due to the presence in this country a wide range of possibilities to product the electric power: nuclear, thermal, hydro, and solar and wind power.
This trading instrument is relatively illiquid if we compare it with major currency pairs, such as: EUR/USD, USD/CHF, GBP/USD, and USD/JPY. Therefore, when you make a forecast for the financial instrument, you should focus on those currency pairs that include the US dollar together with each of the considered currencies.
If you trade cross rates, it is necessary to remember that brokers usually set a higher spread than for more popular currency pairs, so before you start working with the cross rates, you should carefully read the conditions offered by the broker to trade with specified trade instrument.