Lengthy CAD/CHF – A Mixture of Danger Developments and Positioning

CAD/CHF 1Q Forecast: Lengthy CAD/CHF – A Mixture of Danger Developments and Positioning

2020 has been a 12 months like no different and seared into reminiscence. Fortunately, with a number of vaccines scheduled to be rolled out and with world financial and financial stimulus right here to remain, 2021 seems to be to be a greater 12 months. As the vaccination course of will get underway, detrimental tail dangers are prone to recede, whereas lockdown measures may even proceed to be eased, thus permitting for a brighter financial outlook. A lot like 2020, with world rates of interest on the zero certain, “RORO” (Danger On Danger Off) ought to stay a key driver for FX. As such, my commerce of the 12 months is to place that method with a bullish outlook on CAD/CHF.

As the worldwide financial outlook improves with pent up demand supporting development, dangers are tilted to the upside for oil costs, which in flip is prone to maintain the Canadian Greenback afloat, notably towards the likes of the Swiss Franc.

G10 FX Correlation with Oil Costs

Positioning: Having a look at institutional place, speculators proceed to keep up a sizeable brief within the Canadian Greenback, whereas Swiss Franc internet longs are buying and selling at extremes. As such, CAD/CHFupside could be exacerbated by an unwind briefly CAD/CHF positioning.