CHF/JPY Outlook:
Slightly positive, but likely to move sideways as the rate is just above its recent average and lacks a clear current driver.
Key drivers:
• Rate gap: The Swiss National Bank maintains a strong Swiss Franc to potentially combat deflation, while the Bank of Japan has recently raised interest rates to tackle higher inflation.
• Risk/commodities: Oil prices are currently volatile and above their average, which can influence the Japanese Yen due to its ties in export pricing and economic stability.
• One macro factor: The proposal for tax cuts in Japan amid election concerns is increasing uncertainty around the Yen’s future value.
Range:
CHF/JPY is expected to hold within its recent trading range as markets assess the impacts of monetary policy changes and global economic conditions.
What could change it:
• Upside risk: A significant increase in safe-haven demand for the Swiss Franc due to escalating global uncertainties.
• Downside risk: Weaker Japanese economic data or policy shifts that undermine confidence in the Yen.
