CHF/CAD Outlook: The outlook for CHF/CAD is likely to increase as it currently trades above its recent average and near recent highs, supported by strong oil prices.
Key drivers:
- Rate gap: The Swiss National Bank (SNB) maintains a 0% policy rate, while the Bank of Canada (BoC) just reduced its rate, making the Swiss Franc more attractive.
- Risk/commodities: Oil prices are currently above average and are impacting the Canadian dollar negatively, as lower oil prices typically weaken the CAD due to reduced export revenues.
- Trade policy uncertainty: Recent tariffs on Canadian exports to the U.S. have sharply declined trade volumes, further pressuring the CAD's strength.
Range: CHF/CAD is expected to hold within its recent 3-month range, reflecting stability amid ongoing trade issues.
What could change it:
- Upside risk: A potential increase in oil prices could strengthen the CAD if Canadian trade improves.
- Downside risk: If the SNB considers negative interest rates to combat a strong franc, this could weaken the CHF against the CAD.