1. Diverging Economic Exposure:
The CAD and CHF sit on opposite sides of current macro themes:

CHF (Swiss Franc) thrives in low-volatility, risk-off environments and is deeply tied to Eurozone dynamics.

CAD (Canadian Dollar) is more cyclical, closely linked to commodities (especially oil), and typically benefits from global reflation or rising yields.

Right now, we’re seeing a growing risk premium on the US and global sovereign debt, which is fueling bond market volatility. That weakens traditional havens like CHF — especially as Swiss yields stay ultra-low, and the SNB remains cautious.

2. Oil Resilience Supporting CAD:
Despite concerns about global growth, commodity markets — especially oil — are holding up. If inflation risks persist due to shipping inflation or tariffs, commodities will likely stay supported. That’s bullish for CAD, given Canada’s strong resource exports.

3. Positioning and Reversal Potential:
CHF has been bid up recently as a defensive play. But if sentiment begins to stabilize — or even just rotate toward "hard asset" currencies like CAD — we could see a reversal in CHF strength.

Pairing a commodity-backed, higher-yielding currency (CAD) against a low-yield safe haven (CHF) creates a clean long exposure to:

4. Yield Differentials & SNB Dovish Tilt:
The Bank of Canada has been cautious, but still relatively hawkish compared to the SNB, which has already hinted at more easing. Rate differentials are no longer favoring CHF, and any further divergence would support CADCHF upside.

LONG CADCHF

May 20 2025