Bias: The outlook for CHF/JPY remains bullish-to-range-bound as it is currently above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Swiss National Bank has maintained a 0% policy rate, while the Bank of Japan has recently raised its rate to 0.75%, marking a shift towards tightening in Japan.
• Risk/commodities: Oil prices are currently above the average, which could support the Japanese yen as rising energy costs affect import costs.
• One macro factor: Japan's government approved a record fiscal budget, which could eventually exert downward pressure on the yen despite immediate stimulus.
Range: CHF/JPY is expected to hold its current levels, potentially testing the upper end of the recent range.
What could change it:
• Upside risk: Stronger-than-expected economic data from Switzerland could bolster the franc further.
• Downside risk: Any aggressive intervention by Japan to stabilize the yen could negatively impact CHF/JPY.