CAD/CHF Outlook:
The CAD is currently trading below its recent average, near recent lows, indicating a likely decrease in value against the CHF. The weak performance of oil prices is a significant factor influencing this outlook.
Key drivers:
• Rate gap: The Bank of Canada maintains a higher interest rate compared to the Swiss National Bank, which may cause capital to flow towards the CAD when risk appetite improves.
• Risk/commodities: Recent oil prices are significantly above their average, suggesting that any increase could support the CAD if sustained, but current instability in prices is pressuring it downward.
• Macro factor: Ongoing trade tensions, particularly tariffs affecting Canadian exports to the U.S., are undermining the CAD's strength.
Range:
Expect the CAD/CHF to drift within its recent range, influenced by commodity volatility and trade developments.
What could change it:
• Upside risk: A sustained rise in oil prices could strengthen the CAD, providing support against the CHF.
• Downside risk: Continued trade tensions and resulting economic uncertainty could exacerbate CAD weakness, leading to a sharper decline.
