We continue to observe CAD/CHF. At the moment the chart seems like there is a trend reversal in favor of CHF. But in fact, there will be no reversal, because analyzing all the fundamental factors, we may predict that the Canadian dollar will resume its upward trajectory and enhance its position versus all other currencies.
This week, the focus of investors' attention was the meeting of the Bank of Canada, the rate was increased by 50 pips as a result of the meeting. The key factor here is the perspective of further rate increases in the near future. This means that this is why the Canadian dollar will become stronger. The toughest steps are being taken to combat inflation, and this is very impressive for investors. The rate amounted to 1.5%, with perspective of an increase to 3%.
What prevents the Canadian dollar from soaring up today is, of course, a report on GDP growth of 3.1%, while growth of 5.4% was expected. In general, according to macroeconomic reports, CHF received more support than CAD, since GDP growth was recorded in Switzerland above forecasts, as well as the restoration of the trade surplus to the level of previous year. However, the Bank of Canada's more aggressive monetary policy, combined with a record spike in oil prices, makes the Canadian dollar a formidable competitor, especially given investors' extreme attachment to risky assets.
Most of the technical analysis indicators show us the effectiveness of Buying in the medium term, which once again confirms our theory that the trend reversal will not take place this time, and the Canadian dollar will be able to take the initiative. Moreover, we consider it underrated at the moment. Therefore, our choice today are the deals to BUY.
