CHF/JPY Outlook:
Bullish, as the rate is above its recent average and near recent highs, supported by strong demand for CHF.
Key drivers:
• Rate gap: The Swiss National Bank could reintroduce negative rates to curb the strong CHF, while the Bank of Japan raised interest rates recently to combat inflation.
• Risk/commodities: Rising oil prices could support the JPY as Japan relies on energy imports, but safe-haven flows into the CHF continue to drive its strength.
• One macro factor: Ongoing geopolitical tensions are pushing investors toward the CHF as a safe-haven asset amidst economic instability.
Range:
CHF/JPY is likely to hold near current highs after trading in a stable range.
What could change it:
• Upside risk: An unexpected increase in demand for safe-haven currencies could elevate the CHF further.
• Downside risk: If the Bank of Japan's policies effectively strengthen the JPY further, this could pull the CHF down.