The CAD is currently in a range-bound market against the CHF.
Key drivers include:
- Interest rate differential: The Bank of Canada maintained its policy rate at 2.25%, while the Swiss National Bank has implemented rate cuts to 0.5% to combat low inflation.
- Macro factor: Stronger job growth in Canada has increased confidence in the CAD, while Swiss inflation dropped unexpectedly to 0.1%, reflecting economic challenges.
- Oil prices have a significant influence on the CAD, currently trading at 61.60, just below its average, which may limit upward movement in the currency.
Over the near term, the CAD/CHF exchange rate is expected to trade within a stable range relative to recent highs. An upside risk includes an unexpected rebound in oil prices, which could help the CAD strengthen. Conversely, a downside risk involves potential currency interventions by the Swiss National Bank in response to a strong CHF, which may impact the CAD's positioning.