The current market bias for the CHF to CNY exchange rate is bearish.
Key drivers include:
- Interest rate differentials are tightening as the Swiss National Bank cut rates to combat low inflation, while China's policy easing is delayed but anticipated.
- Swiss inflation has dropped significantly, which could weigh on the Swiss franc’s strength.
- China's economy is showing signs of gradual improvement alongside expectations of a stable yuan, supported by trade surpluses and low inflation.
The near-term trading range is likely to remain stable, with no significant fluctuations expected beyond the current levels.
An upside risk could emerge from a resurgence in Swiss exports if tariffs are reduced or removed. A downside risk could stem from further unexpected policy easing by the People's Bank of China, which may place additional downward pressure on the yuan against the franc.
