CAD/CHF Outlook: Slightly weaker, but likely to move sideways, as the rate is currently below its recent average and near the lower end of its range.
Key drivers:
• Rate gap: The Bank of Canada's steady policy contrasts with speculation on potential interventions by the Swiss National Bank due to the CHF's strength, which may raise risks for the loonie.
• Risk/commodities: Oil prices are significantly above their average, which could support the Canadian dollar if sustained, although current CAD performance remains muted.
• One macro factor: Political instability in the U.S. is driving demand for safe-haven assets like the Swiss franc, affecting the CAD/CHF rate.
Range: Expect the CAD/CHF pair to remain stable, possibly testing recent lows if oil prices do not maintain momentum.
What could change it:
• Upside risk: A significant rebound in oil prices could enhance the CAD against the CHF.
• Downside risk: Ongoing U.S. political tensions could further strengthen the CHF, putting additional pressure on the loonie.