CAD/CHF Outlook:
Bearish, as the CAD is below its recent average and near recent lows due to increased tensions impacting trade and the economy.
Key drivers:
• Rate gap: The Bank of Canada's cautious stance contrasts the Swiss National Bank's potential for negative rates if the CHF remains strong.
• Risk/commodities: Despite a recent rise in oil prices, CAD has weakened, influenced by geopolitical tensions, which are affecting its export potential.
• One macro factor: The imposition of significant tariffs by the U.S. has added to the downward pressure on the CAD, harming trade relations.
Range:
Expect CAD/CHF to remain under pressure, likely drifting within its recent stable range but trending downward.
What could change it:
• Upside risk: A robust recovery in oil prices could boost the CAD, leading to a stronger performance.
• Downside risk: Further escalation of U.S.-Canada trade tensions may weaken the CAD further against the CHF.
