CADCHF is one of the most popular currency pairs in the Forex market. Before trading on this pair, a trader needs to know both Canadian (CAD) fundamental view and Swiss (CHF) fundamental view. Basically, the fundamental view will give you the idea of the strongest currency in the currency pair.
CAD Fundamental View
The currency is currently moving based on market speculation about what the BoC will do next and ongoing developments surrounding US/China trade negotiations.
The BoC was much more upbeat at their December meeting; suggesting the economy is ‘operating near capacity” along with stronger wage growth to support consumer spending. Additionally, the BoC stated their projection for global economic growth was intact, expecting growth to edge higher over the next few years.
Following the BoC’s December meeting, the rate cut expectations for March fell to just 20%. Since then, however, rate cut expectations have been on the rise with BAX prices implying there is now a 33% probability of a 25bp rate cut by March and a 61% probability of a rate cut by December.
Canada’s monetary policy outlook remains tied to the global economic outlook and the global trade outlook, especially regarding the US/China trade. As such, developments between the US and China over trade will remain highly influential for CAD, especially once phase two negotiations are underway.
If phase two progresses smoothly, rate cut expectations are likely to be pushed back; however, if phase two talks break down, rate cut expectations are likely to increase notably.
Additionally, comments from BoC members and economic data will be key to determine exactly how much trade uncertainties are influencing the Canadian economy and the BoC’s rate outlook.
CHF Fundamental View
The Swiss Franc is a pure safe-haven mode. Swish economic data have very little impact on CHF. Especially SNB and safe-haven issues have a great impact on CHF.
Stronger CHF is always bad for the swish economy. That’s why the SNB may intervene by selling the currency to stop it appreciating too much. But the impact of these interventions is usually short-lived and unpredictable most of the time. But technically it has reached near to the point.
Unjustified and sudden weakness in CHF during times of risk-off sentiment can be a great opportunity to buy-on-the-dips, a well-known strategy that has become increasingly popular with many investment banks.
Now, you should get the very basic fundamental idea of both currencies. But, still, you are not ready to trade CADCHF. Therefore, it is the time, you should focus on CADCHF technical view and be more confident before investing.
CADCHF Technical View
Therefore, our preference is a long position as long as the market staying above 0.7369 level in CADCHF. The first target should be at 0.7430 to 0.7455. If 0.7460 breaks and stabled next target should be 0.7500 to 0.7520 area. And final target would be to upside 0.7600
On the other hand, the downside market needs to break below 0.7469area. If 0.9530 area breaks and stable my first target 0.7345 area. And finally 0.7330 to 0.7320 area.