CHF/JPY Outlook:
CHF/JPY remains slightly positive as it trades above its 90-day average and is close to recent highs. The Swiss franc's strength is supported by its safe-haven status amid ongoing global uncertainties.
Key drivers:
• Rate gap: The Swiss National Bank maintains a low interest rate while the Bank of Japan has started hiking rates, creating a widening gap that favors the CHF.
• Risk/commodities: Oil prices are currently at a 90-day high, generally supporting the JPY when global demand remains strong, but overall risk aversion boosts the CHF.
• Macro factor: Political uncertainty in Japan, including proposed tax cuts ahead of elections, could undermine the JPY and benefit the CHF.
Range:
Expect CHF/JPY to hold within its recent range as it trades near peaks.
What could change it:
• Upside risk: A stronger-than-expected economic rebound in Switzerland could increase the CHF further.
• Downside risk: Renewed global risk appetite could lead to JPY strengthening, putting downward pressure on CHF/JPY.