CAD/CHF Outlook: Slightly weaker, but likely to move sideways; the Canadian dollar is trading below its recent average and near recent lows, facing pressure from multiple factors.
Key drivers:
• Rate gap: The Bank of Canada has reduced interest rates, while the Swiss National Bank maintains a stable 0% policy rate, which makes the Swiss Franc more attractive.
• Risk/commodities: Oil prices have recently risen above their average, providing some support to the Canadian dollar, but overall volatility continues to impact its strength.
• One macro factor: Trade policy uncertainty, especially U.S. tariffs on Canadian exports, has significantly hurt the Canadian dollar, contributing to its current weakness.
Range: CAD/CHF is likely to drift within its recent stable range as both currencies react to external pressures.
What could change it:
• Upside risk: A significant increase in oil prices could support the Canadian dollar.
• Downside risk: Further deterioration in U.S.-Canada trade relations may heighten pressure on the Canadian dollar.
