The current market bias for the CHF to AUD exchange rate is bearish.
Key drivers include the interest rate differential, as the Swiss National Bank has recently cut rates, while the Reserve Bank of Australia is expected to raise rates. This creates a widening gap favoring the AUD. Risk sentiment remains cautious due to recent security incidents in Australia, which may impact consumer confidence. Additionally, Australia’s positive economic outlook is supported by inflation above target levels, suggesting stronger economic momentum compared to Switzerland.
In the near term, the CHF/AUD is expected to trade within a stable range, reflecting the current slight undervaluation of the franc compared to its three-month average.
An upside risk arises if the SNB reverses its rate cuts amidst global tightening, potentially boosting the CHF. Conversely, a downside risk could emerge if the RBA raises rates more aggressively than anticipated, further strengthening the AUD against the CHF, thus impacting exchange rates significantly.
