USD/CHF — the Swiss franc as a safe haven

Thursday, 15 January 2015, 10:30 Zurich time. Marek runs a retail account from his flat in Krakow with one of the popular European brokers and is sitting on a long EUR/CHF position — five standard lots taken at 1.2010, with a fifteen-pip protective stop. For two years the strategy has been working steadily: the SNB has pledged to defend the 1.2000 floor and for over a thousand two hundred days it has kept its word. That morning Marek wakes up, opens the platform, and sees a red bar with the day's result: minus 47,800 zlotys. During the five minutes he never witnessed, EUR/CHF had fallen from 1.2000 to 0.8500. In this article we explain what USD/CHF and the Swiss franc (CHF) are as the classic safe haven, how an SNB intervention actually works, why 15 January 2015 (peg removal) remains the most important lesson of the decade, and what all of this means for a Polish investor who wants to ease into trading this pair without getting burned.

What USD/CHF is and why the franc is the classic safe haven

The phrase "safe haven" in market language refers to an asset that gains in value during periods of risk aversion. The classic safe-haven set covers four instruments: the US dollar, gold, the Japanese yen, and the Swiss franc. Each draws its status from a different source. The dollar is the global reserve currency and the settlement leg of commodity trade. Gold is a direct hedge against fiat depreciation. The yen has long been tied to Japanese savings being repatriated during panic episodes. The Swiss franc, in turn, owes its status to two centuries of consistent political neutrality and conservative central-bank policy.

Switzerland has held formal neutrality since the Congress of Vienna in 1815 — through two world wars, the Cold War, the Balkan conflicts and Middle Eastern crises. That means the franc does not carry the geopolitical risk premium any front-line state currency or military-alliance member's currency must bear. The balance of that long history shows up in a simple statistic: in the five largest crises of the last twenty years — the Lehman collapse in September 2008, the eurozone crisis in August 2011, the peg removal in January 2015 (paradoxically), the pandemic in March 2020, and Russia's invasion of Ukraine in February 2022 — the franc gained against most major currencies in the first week of the event. The average CHF appreciation in the first seven days of panic is around 4 to 8 percent against the euro.

USD/CHF in numbers — what a trader needs to know

By turnover, USD/CHF is smaller than EUR/USD, USD/JPY and GBP/USD, but it still sits firmly inside the majors club. The BIS Triennial Survey 2022 puts the pair's share of global turnover at roughly 5.2 percent — that translates into a daily notional volume of around 365 billion dollars. The retail spread at a mid-tier regulated broker (Saxo Bank, IG, Swissquote, XTB) typically lands in the 0.5–1.5 pip range during European and US hours. In Asian hours the spread widens to 2–4 pips, and weekend gaps from Friday to Monday usually run 15–30 pips after meaningful weekend news.

The −0.95 correlation with EUR/USD is a frequent source of confusion for beginners. The number suggests the pairs are practically identical with an inverted sign, which leads people to skip a separate analysis of USD/CHF. In reality that five-percent gap covers every moment when the franc moves on its own terms — meaning essentially everything tied to the SNB and to safe-haven capital flows. A trader who treats USD/CHF purely as a mirror of EUR/USD is ignoring exactly what makes the pair distinct and worth watching.

The SNB and the unusual design of Swiss monetary policy

The Swiss National Bank (SNB) is a peculiar institution by major-central-bank standards for three reasons. First, its mandate explicitly covers price stability while taking the economic situation into account, but in practice the SNB has for decades placed unusual weight on the exchange rate. For a small open economy with exports above 70 percent of GDP, the franc's level matters far more than for the average G7 central bank. Second, the SNB is one of only two central banks in the world (alongside the Bank of Japan) whose balance sheet has exceeded 90 percent of national GDP — the tool that delivered that scale was years of buying foreign assets with newly printed francs. Third, the SNB is partially listed on the Swiss stock exchange (SIX Swiss Exchange under the ticker SNBN) — its shareholders are cantons, regional cantonal banks and private investors. That ownership structure is unique among the central banks of major economies.

Three intervention mechanisms are continuously available and routinely used. First, foreign-asset purchases: the SNB prints francs to buy government bonds (primarily the United States and Germany) and equities of global companies. The SNB portfolio includes stakes in Apple, Microsoft, Alphabet and Amazon worth tens of billions of dollars each. The bank's balance sheet topped 700 billion francs by the end of 2024 — more than 90 percent of annual Swiss GDP. The second mechanism is the rate paid on commercial-bank deposits at the SNB — between 2014 and 2022 it stood at −0.75 percent, the lowest among the developed central banks. A negative rate discourages foreign financial institutions from parking surpluses in francs. The third mechanism is verbal intervention during the quarterly monetary policy assessment — the so-called sight deposits report, published four times a year in March, June, September and December.

September 2011 — the introduction of the EUR/CHF floor

To grasp the drama of 15 January 2015, you have to step back three and a half years. By August 2011 the eurozone crisis is at its sharpest — Greece is on the edge of bankruptcy, Standard & Poor's has just stripped the United States of its AAA rating, the VIX fear gauge on US markets is jumping from 18 to 48 points in three weeks. Global capital flees to safe havens. EUR/CHF drops from 1.4000 in February 2011 to 1.0070 in the first days of August — nearly 30 percent in six months. Swiss exports, on which more than two million jobs depend, lose competitiveness at dramatic speed. Watchmakers, machine builders and pharma producers report they cannot hold margins with the franc that strong.

On 6 September 2011 the SNB announces, in an emergency communiqué, a EUR/CHF floor at 1.2000. The original wording reads: "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities." The market reaction is immediate — EUR/CHF leaps from 1.1100 to 1.2050 in three hours. Over the following three years and four months the SNB really does defend that line. The bank's balance sheet swells from 200 billion francs in August 2011 to over 500 billion francs by the end of 2014 — a two-and-a-half-fold expansion in three years. The SNB prints francs, swaps them into euros, then deploys the euros into euro-denominated assets, mainly German government bonds.

The strategy is criticised from both sides. Conservative Swiss economists warn that such aggressive balance-sheet growth exposes the SNB to exchange-rate losses once normalisation eventually arrives. From the other direction, the export Mittelstand pushes for the floor to be lowered below 1.2000, arguing even that level leaves the franc too strong for competitive exports. The SNB rejects both critiques consistently — for three years and four months it repeats the same formula in every quarterly communiqué: the minimum rate will be defended "with the utmost determination," market interventions will continue "in unlimited quantities."

15 January 2015 (peg removal) — the five minutes that changed FX

On the evening of 14 January 2015 the SNB board meets in a closed session. The decision they take remains fully sealed until the next morning — no leaks, no advance hints. The following day, Thursday 15 January at 10:30 Zurich time, the SNB publishes its communiqué: the EUR/CHF minimum rate is removed with immediate effect. At the same time the deposit rate for commercial banks drops from −0.25 to −0.75 percent. Chairman Thomas Jordan's comment reads: "The minimum exchange rate had fulfilled its role in a period of exceptional uncertainty and is no longer consistent with Swiss monetary policy."

The market reaction is brutal. In the first ninety seconds EUR/CHF falls from 1.2000 to 0.9800. Within another three minutes it reaches 0.8500 — a 30 percent drop in five minutes. USD/CHF falls from 1.0210 to 0.7470 in the same window, a more than 27 percent move. Algorithmic systems run by market makers, programmed to defend the levels of recent months, generate catastrophic execution errors. Retail brokers cannot execute stop losses through the liquidity vacuum — the price gap between the last 1.2000 print and the next print at 0.9800 means stops parked in the 1.1985–1.1990 range will never be filled at that level. A trader who set a fifteen-pip stop loss gets filled 220 pips deeper. Marek from the opening of this article is one of thousands of such cases on that day.

"The minimum exchange rate had fulfilled its role in a period of exceptional uncertainty and is no longer consistent with Swiss monetary policy. The SNB balance sheet cannot grow indefinitely — at some point the cost of defending a rate exceeds the benefit of that defence." — Thomas Jordan, Chairman of the Swiss National Bank, press conference, 15 January 2015.

The fallout of 2015 — broker bankruptcies and the retail lesson

Within twenty-four hours of the SNB announcement at least twelve retail brokers in various jurisdictions declare insolvency or report serious liquidity strain. FXCM — one of the world's largest brokers, listed on the NYSE under the ticker FXCM — informs the market that clients owe the firm 225 million dollars and that the firm itself is failing the SEC's minimum capital requirements. Rescuing FXCM requires an emergency 300-million-dollar loan from Leucadia National Corporation, struck at 10 percent annual interest — a loan FXCM never fully repays, and the firm is forced out of the US market by the CFTC in 2017. Alpari UK, regulated by the FCA, files for bankruptcy. Excel Markets in New Zealand announces it will close. Saxo Bank pursues some clients through the courts to recover funds — several retail accounts go into negative balance despite formal negative-balance protection clauses.

The lesson for retail traders is hard and concrete. First: negative-balance protection in your broker's terms can, in extreme events, turn into a promise the broker is in no position to keep — because the broker itself goes bust. Second: a stop loss does not protect against a price gap — it only protects against a price move that does not exceed the spread. In the five-minute window of 15 January 2015 a stop loss was simply a tool with no effect. Third: market leverage that lets you earn more in calm conditions lets you lose more than your paid-in capital under shock conditions. Fourth, and perhaps most important: a central bank can at any point reverse the policy it was still officially defending the previous week — all it took was Thomas Jordan and his board concluding on a Tuesday evening that defending the rate any longer no longer made economic sense.

USD/CHF today — when to trade and when to step aside

After the shock of 2015 USD/CHF has gradually returned to a normal trading rhythm, but the pair's character has shifted. Daily volatility now runs slightly higher than during the peg years, and market participants treat SNB signals with rather more caution. The practical guidance for a Polish trader who wants to trade this pair fits four rules. First: track the SNB calendar — the four quarterly communiqués (March, June, September, December) are the only scheduled moments for a public policy change, but history teaches that the bank can act outside that calendar.

Second rule: avoid large positions over the weekend, especially when a major geopolitical or macroeconomic event is unfolding on Friday evening. Weekend gaps on USD/CHF typically run wider than on EUR/USD or USD/JPY — ten to thirty pips in quiet periods, up to a hundred pips after major events. Third: use the correlation with EUR/USD as an analytical tool, not as a copy-paste signal — when both pairs move in line with their inverse expectation (−0.95), the signal is strong; when the correlation breaks down temporarily, that is the sign the franc is moving on its own terms and you need to look to CHF-specific drivers for the reason.

Fourth rule: respect the technical levels around historical SNB intervention zones. The 0.9000–0.9200 zone on USD/CHF was for years the front line for defending the franc against excessive strength; every approach to that area calls for heightened attention to bank communiqués. The 1.0500–1.0700 zone, conversely, is where the franc is judged to be undervalued — historically the SNB has held back from supporting the currency in this neighbourhood. Those two zones do for USD/CHF what 1.2000 did for EUR/CHF in 2011–2015: they are the psychological and institutional lines of defence.

What this means in practice for a Polish investor

The Swiss franc (CHF) as a safe haven is, for a Polish trader, a tool of dual nature. On one side — it is one of the most predictable currencies in the world, anchored to the steadiest macroeconomic fundamentals among the developed economies. Low inflation, low public debt, long-running political neutrality, a competent and conservative central bank. On the other side — it is a currency whose central bank can, in five minutes, vaporise months of retail positioning through a decision it had kept under full secrecy the previous evening. Those two qualities don't contradict each other — on the contrary. SNB conservatism is part of what sustains long-term franc credibility, but the same institutional capacity for hard decisions means a black-swan risk on a scale you don't see at the Bank of England, the Bank of Japan, or the Federal Reserve. How a stop-loss behaves during a sudden market shock and why it cannot protect against a price gap is covered in the article on black-swan events — will a stop-loss protect you from a market shock.

In practical terms for a Polish investor this leads to two concrete recommendations. First: in a currency book, CHF can play a diversifying role, but it should be treated as a long-term position, not a speculative one. A trader who sees rising geopolitical tension and decides to add franc exposure should think in quarters, not days. Second: for short-term USD/CHF trading three habits are essential — reading SNB quarterly communiqués, avoiding excessive leverage (a safe ceiling for beginners is five-times, not fifty-times), and sizing positions so that a 300-pip simultaneous price gap does not wipe out the account. Marek's lesson from the opening of this article cost him 47,800 zlotys out of a 60,000-zloty account — in five minutes. In the years to come there will keep being moments when a similar central-bank decision can arrive just as suddenly.

Related reading: USD/CHF — the Swiss franc as a safe haven — a shorter treatment of the same theme with a focus on correlations and trading hours; SNB intervention CHF — detailed history of SNB interventions and the mechanics of bank policy; EUR/USD — characteristics of the most important forex pair — the inverse-correlated partner of USD/CHF.