Despite all the problems in the European Union, the exhausting struggle with Russia, and the problems in the Swiss banking system, the Swiss franc feels great versus the Canadian dollar. How did this become possible? - looking for answers in this review.
In November, the Canadian dollar was under pressure due to strong inflation, as well as falling oil prices to the lowest for the entire 2022 year. Also, according to investors, the Bank of Canada is lagging behind in the rate hike rally by leading central banks, and the deterioration of economic indicators in the future will make it impossible to increase rates.
As for the Swiss franc, this currency received support as a safe asset against the background of the global recession, against the background of the fall and crisis of the cryptocurrency market and problems in relations with Russia. This is happening despite the deterioration of Switzerland's economic indicators. There were a lot of new reports this week, and they all pointed to a recession. The ZEW index of economic expectations in Switzerland fell to -57.5 points, and GDP in the 3rd quarter grew by only 0.3%. Nevertheless, we see a rapid strengthening of the CHF, which may become so rapid that the central bank will have to make another currency intervention, though there were quite a lot of them this year.
We believe that the decrease in the rates will continue next week. Volatility remains high, as investors are waiting for the publication of the trade balance and business activity in Canada, and from Switzerland we are waiting for the unemployment report. Technical analysis indicators indicate the effectiveness of the deals to SELL. It is expected that the two-year minimum of 0.6800 will be tested, and maybe even refreshed in the near future. In the current situation, we follow the example of most investors and choose safe assets today. Such deals can be effective not only in the short term, but also in the long term.
