After the ECB acted in early December, EUR/CHF remained below trend. When the Fed acted a few days later, USD/CAD jumped above trend; consequently the Franc strengthened vs the Loonie. The Loonie attained its 52 week low vs the USD at the same time the Loonie attained its 52 week low vs the Franc. 

From the Loonie low, CAD/CHF reversed. The weakening of the Franc vs the Loonie corresponds to the weakening of the Franc vs the Euro to a 52 week low of CHF 1.115 on 4 February. At this point, USD/CAD had reversed. The Loonie strengthened vs the Dollar. This is reflected in the CAD/CHF chart; the Loonie gained on the Franc.

Since then, the Franc has gained vs the Euro and then fell into a narrow range vs the Euro; however, the Loonie is still trending stronger vs the US Dollar.

This brings CAD/CHF to its present CHF 0.7487 vs the Loonie. Complicated? Yes. Insignificant? No.

Once again, both Franc and Loonie are closely related to the Euro and US Dollar, respectively, and thus ECB and US Fed strategies, respectively. As it is now, the ECB has stated its intent to allow time for the expanded policy to work. The SNB seems satisfied with the current Euro exchange, (although it would no doubt prefer better). The BOC may also prefer to maintain its policy as long as the US economy remains relatively strong, creating export demand.

Hence, it all boils down to the Fed. If the Fed is to ratchet up another 25 basis points, it must do so by June. The Fed will not act too near a national election, in this case November. Else the Fed must wait until after the elections; i.e., in December.    

What it all amounts to is a likely further strengthening of the Loonie vs the US Dollar, while the ECB and SNB maintain policy and consequently the Franc is likely to continue to weaken vs the Euro. Lastly, weak US economic data will certainly push any expected Fed rate increase to later in 2016.

Mike Scrive
Technical Analyst
Accendo Markets

CFDs, spread betting and FX can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure you understand the risks. Seek independent financial advice if necessary. Nothing in this article should be considered a personal recommendation. It does not account for your personal circumstances or appetite for risk.


1 BOC Press Release 15-7-2015
2 SNB Press Release 15-1-2015
3 SNB Press Release 17-3-2016
4 BOC Press Release 13-4-2016