CAD/CHF Outlook:
Bearish, as the rate is below its recent average and near recent lows, with pressures from oil prices and domestic economic performance.
Key drivers:
• Rate gap: The Bank of Canada has maintained its benchmark rate amid subdued economic growth, while the Swiss National Bank is exploring negative rates to address a strong CHF.
• Risk/commodities: Oil prices recently rebounded but remain volatile; as Canada is a major oil exporter, this instability weighs on the CAD's value.
• One macro factor: Canada’s economy flatlined in November, further limiting the CAD's support as weaker services PMI points toward ongoing challenges.
Range:
Expect CAD/CHF to hold steady within its recent range, though evident downside risks could test lower extremes.
What could change it:
• Upside risk: An unexpected stabilization in oil prices could support a recovery in the CAD.
• Downside risk: Continued declines in services sector performance and oil price weakness might deepen pressure on the CAD.
