CHF/AED Outlook: The outlook for CHF/AED is likely to increase as it is currently trading at recent highs and is significantly above its 90-day average.
Key drivers:
- Rate gap: The Swiss National Bank maintains a zero policy rate while the UAE central bank's base rate is currently higher, creating a supportive environment for the AED against a low-yielding CHF.
- Risk/commodities: Oil prices have remained stable, which should support the UAE economy and enhance the dirham's position relative to the franc.
- One macro factor: The significant decline in Switzerland's trade surplus, largely due to high tariffs imposed by the U.S., could further weaken the franc's resilience.
Range: The CHF/AED pair is expected to drift higher within its recent range as it tests established highs.
What could change it:
- Upside risk: An unexpected increase in the eurozone growth could create upward pressure on the CHF, potentially prompting the Swiss National Bank to adjust its interest rate strategy.
- Downside risk: A reversal in oil prices or a significant economic slowdown in the UAE could negatively impact the AED's strength against the CHF.
