CAD/CHF: Review & Forecast

Starting from January, an upward trend was formed in favor of the CAD, which became possible due to the recovery of oil prices. After reaching many-years lows, oil recovered and solidly entrenched in the range of 50-55 dollars per barrel of CL/WTI. This became possible after the emergence of the political crisis in Venezuela, which was on the verge of a coup. In addition, the Swiss franc began to lose ground amid the economic downturn in the EU, since the Swiss economy is dependent on the situation in the region. The latest economic indicators of Switzerland are quite similar to those in the eurozone. Thus, the manufacturing PMI index of business activity in Switzerland was at the lowest in the last 2 years, as in the eurozone. Also, the Swiss investor sentiment remains negative for the sixth month in a row and fell to the lowest in the last 7 years, the value of -44 pips in January.

The Canadian dollar stabilized after the recovery of oil prices and remains at a high level. At the same time, the forecasts for the cost of oil are favorable for the CAD. Despite fears of a slowdown in the global economy and the illusory prospects for a solution to the trade conflict between the US and China, oil could rise in price with reducing oil supplies from Iran and Venezuela. At the same time, OPEC countries adhere to the approved plan to reduce oil extraction.

Volatility will remain at an average level. In the near future, the market will receive data on the unemployment rate in Switzerland, as well as the trade balance in Canada and the business activity index for January. The oscillators are controversial these days, but the Stochastic oscillator indicates the efficiency of the deals to BUY, taking into account the rates in the oversold zone. In this situation, such deals can be considered the most effective in the short and medium term.