Swiss National Bank

Description

A good forex broker or trader will closely monitor the announcements and practices of major global financial institutions in order to make sound projections that can lead to viable trading.

The Swiss National Bank is such an institution, and is often considered a very important source of information for individuals involved with forex trading.

Switzerland’s central bank is independent but obliged by their Constitution and statute to act with national financial wellbeing in mind while also taking into account the current economic situation globally.

Like most central banks, the Swiss National Bank regulates the Swiss money supply, influences national interest rates, and tries to maintain price stability. However, in addition to these duties, the Swiss National Bank also has a greater than normal effect on exchange rates between other national currencies.

In 1971, the US moved away from the gold standard, leading to the current system of variable exchange rates that started 1973. The Swiss National Bank sought to maintain the stability of the Swiss Franc by making “swap” transactions of foreign currencies; the foreign currency is bought and sold at the beginning and end of each “swap” period for comparable exchange rates. Because of this, the Swiss National Bank has a very strong effect on prices of many different national currencies that are commonly traded throughout forex trading platforms.

Forex Trading Importance

Most forex brokers and traders know that the Swiss National Bank is a good source to look to when making decisions about new investments in the currency markets. The Bank’s actions should be watched carefully, and appropriate responses should be made to any new announcements, policies, and buying or selling patterns.

Related FX Trading Indicators

A good forex broker or trader will pay close attention to the central banks of countries that have the six major currencies. Examples include the Bank of England, the Bank of Japan or the European Central Bank.

For more info on national financial institutions or common economic indicators, browse our additional forex trading resource pages.