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Swiss Franc Futures Volatility Forecast (17/10/2010)

The decision to introduce the Swiss Franc in weekly analysis that HyperVolatility proposes is correlated to the importance that such a currency has in determining the good health of global economy. Specifically, during financial crises or politically troubled periods investors are rather risk-reluctant and tend to prefer old school investment strategies and secure commodities. Switzerland is well known in the world for the stability of its banking system and historical data shows increasing cash flows getting into this country when political or financial downturns happened. Consequently, when investors put money in Swiss bank accounts they are effectively buying swiss franc and therefore the greater is the fear in the market the higher the swiss franc will go.

As we can see the TGARCH volatility is ridiculously low and the highest level does not even reach 1%. Such a volatility plot clearly confirms the steady, robust and constant uptrend that the Swiss Franc Futures market is currently experiencing.  The next weeks will be very interesting because if volatility manages to break through 1% a sharp movement will be likely to happen in the market. We are still bullish on Swiss Franc but short-term retracements could happen at any time.

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