July was a key month for the CAD/CHF pair: a weak downtrend suddenly became one of the most intense ones. In just a few weeks, the rates lost 3.2%. The reason for these changes was the increase in the probability of a new wave of coronavirus infections. Also, the key factor was the fall in oil prices due to the deterioration of the demand forecast and the agreement of the OPEC+ countries to increase oil production in August. Of course, this put pressure on the Canadian dollar. Also among the reasons are the results of the meeting of the Bank of Canada, at which the regulator revised its economic forecasts downwards. At the same time, over the past seven days Canada has not published macroeconomic reports that could affect the CAD's exchange rate.
The CHF, in turn, received support due to its status of a safe asset. At the same time, the record growth of the trade surplus did not go unnoticed by investors. The Swiss central bank, which opposes the increase of the national currency, has not yet reacted to the strengthening of the franc.
In the near future, investors will focus on the publication of the basic retail sales index in Canada, and next week everyone is waiting for inflation data, and of course Canada's GDP for May. This data may affect the Bank of Canada's decision to change the rate. So the volatility next week will be even higher for the CAD/CHF pair.
Right now on the chart we can see the rates are in the overbought zone, after retreating from a 4-month low. Technical analysis tools are multidirectional. As oil prices tend downward, we believe that the Canadian dollar will remain under pressure in the near future. There is a high probability of a new testing of the minimum. Therefore, the deals to SELL can be effective in the short term. At the same time, the Canadian dollar remains one of the most attractive currencies, and given the desire of investors for risky assets, the deals to BUY can become profitable in the long term, and the current price, which is the minimum for the last 4 months, becomes very attractive for opening such deals today.
