Bias: range-bound, current CAD/CHF sits around the three-month average and near seven-day highs in the upper half of the three-month range, suggesting limited near-term traction.
Key drivers:
- Rate gap: The Bank of Canada’s policy stance remains higher than the SNB’s zero rate, supporting CAD versus CHF on the size of the yield gap and generally firmer Canadian growth signals.
- Oil/commodities: Oil is trading near multi-week highs with notable volatility, which tends to lift the CAD given Canada’s oil export exposure and dampen CHF strength when energy is buoyant.
- Trade policy: Markets perceive US tariffs on Canadian steel, aluminum and autos as a headwind for CAD, limiting upside unless energy and domestic data provide enough offsetting support.
Range: CAD/CHF likely to drift within the three-month range, with a tendency to hover near the upper end.
What could change it:
- Upside risk: A sustained oil rally coupled with stronger-than-expected Canadian data could push CAD/CHF toward the upper end of the range.
- Downside risk: A renewed wave of US tariffs or a risk-off move that strengthens CHF could pull CAD/CHF back.
