CAD/CHF Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and pressured by trade uncertainties.
Key drivers:
• Rate gap: The Bank of Canada has recently cut rates, while the Swiss National Bank maintains a zero interest rate, creating a disadvantage for the Canadian dollar against the Swiss franc.
• Risk/commodities: Oil prices are rising and currently near 90-day highs, which typically supports the CAD; however, the impact may be muted by ongoing trade issues.
• Trade policy uncertainty: Tariffs imposed by the U.S. on Canadian goods have caused significant export drops, negatively affecting CAD's value.
Range: CAD/CHF is expected to hold steady within its recent 3-month range, as mixed signals from both economies create uncertainty.
What could change it:
• Upside risk: A surprising interest rate hike from the Bank of Canada could drive the CAD higher.
• Downside risk: Persistent trade barriers leading to further CAD depreciation could strain the outlook.
