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CAD/CHF: Long CAD/CHF – A Combination of Risk Trends and Positioning

2020 has been a 12 months like no distinctive and seared into memory. Thankfully, with larger than one vaccines scheduled to be rolled out and with world financial and fiscal stimulus acceptable proper right here to stay, 2021 appears to be a larger year. As the vaccination system receives underway, horrible tail dangers are perhaps to recede, even as lockdown measures will in addition proceed to be eased, for this purpose permitting for a brighter financial outlook. Much like 2020, with world hobby charges at the zero bound, “RORO” (Risk On Risk Off) favor to proceed to be a key driver for FX. As such, my alternate of the 12 months is to function that way with a bullish outlook on CAD/CHF.

As the world financial outlook improves with pent up demand supporting growth, dangers are tilted to the upside for oil prices, which in flip is perchance to maintain the Canadian Dollar afloat, especially in opposition to the likes of the Swiss Franc.
G10 FX CORRELATION WITH OIL PRICES
G10 FX Correlation with Oil Prices Chart, Refinitiv Datastream
Positioning: Taking a exhibit up at institutional position, speculators proceed to preserve a massive brief in the Canadian Dollar, while Swiss Franc internet longs are buying for and advertising at extremes. As such, CAD/CHFupside may additionally moreover fantastic be exacerbated by way of the use of way of an unwind in speedy CAD/CHF positioning.

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