The Canadian dollar continues to see support against the Swiss franc, as both the interest rate differential and the oil markets support this pair.
CAD/CHF
The Canadian dollar rallied a bit against the Swiss franc as traders continue to pay close attention to the interest rate differential between currencies around the world. On Tuesday, as we approach the 0.59 level, I believe this is a market that might see a little bit of a headache there, as it's a large, round, psychologically significant figure. One would more likely than not assume that there's at least some type of profit-taking in that area.
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This doesn't mean that I'm expecting some type of major change in the market at that level. I just think it means that the market could very well pull back just a touch. If it does, traders will begin to look for some type of value, would be my guess, and continue to take advantage of the interest rate differential, as the Swiss National Bank has been so adamant about a zero interest rate policy.
Overall, this is a market that I like because you do get paid at the end of every day to hang on to the Canadian dollar.
You have the external influence of the oil markets showing a little bit of interest in the Canadian dollar as well. With this, I believe you have a situation where the 0.5850 level offers a bit of support, right along with the 50-day EMA at the 0.5810 level, and then again at the 200-day EMA.
With all of that being said, it's just difficult to get excited about owning the Swiss franc in this environment. It seems to me that will continue to be the overall attitude towards the Swiss franc, not only against the Canadian dollar, but other currencies as well. Ultimately, I'm just following the carry trade, and as this avoids the noise around the Japanese yen, I like this particular pair.
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