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On 15 July, the BOC continued easing, lowering the overnight deposit rate 25 basis points1 to 0.50% from 0.75%. “...  Hence, the BOC weights its policy strategy takes into account the relative value of the Loonie as well as stimulating the domestic economy.

The SNB implemented a negative rate policy in late 2014, suppressing the Sight Rate to -0.25%, and suppressed it further about a month later to -0.75%. However, the primary purpose of the action was to defend against capital inflows which were driving the Franc to levels which posed a threat to the Swiss export economy2. “... The Swiss National Bank (SNB) is discontinuing the minimum exchange rate of CHF 1.20 per euro. At the same time, it is lowering the interest rate on sight deposit account balances that exceed a given exemption threshold by 0.5 percentage points, to −0.75%... ...The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets. This exceptional and temporary measure protected the Swiss economy from serious harm...”

The comparison charts above demonstrate the respective trends over the past two years. The Franc ended 2014 pegged at 1.20 per Euro, gaining rapidly to 0.98615 per Euro after the intervention and gradually weakening to 1.0887. The current rate of exchange is still nearly 18% below the pegged rate. The SNB and noted in the recent 17 March policy assessment meeting3. “...The Swiss franc is still significantly overvalued. Negative interest is making Swiss franc investments less attractive. At the same time, the SNB will remain active in the foreign exchange market, in order to influence exchange rate developments where necessary...”  The point is that the SNB is very ‘Franc defense’ focused.

On the other hand, at the 13 April monetary policy meeting4, the BOC noted that “...The Canadian economy’s complex structural adjustment to the oil price shock is ongoing and will dampen growth throughout the Bank’s projection horizon... ...Non-resource exports are expected to strengthen, but their profile is weaker than previously projected, in part because of slower foreign demand growth and the higher Canadian dollar... ...The economy continues to create net new employment... ...despite job losses in resource-intensive regions...” The point here is that the BOC is focused on easing as a leverage tool needed to restructure its economy. It too prefers a weakened Loonie, but the tightening bias of the Fed may make BOC actions unnecessary. Keep in mind the main export concern is with the US.

CADCHF, Distillation, EUR, CHF, USD, CAD , Currency Analysis, fx trader, forex CAD CHF Price Event ChartCAD/CHF Price Event Chart

The comparison chart demonstrates the weakening trend of the Loonie and the Franc vs the US Dollar and the Euro, respectively, over the course of 2015.

However, the Franc strengthened against the Loonie until late August 2015 when it reversed. This makes sense and is demonstrated in the comparison chart. From about August through November, EUR/CHF was mostly above trend while USD/CAD went from above to below trend; i.e. the Franc weakened vs the Loonie from mid-August through early December.

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