FXF

GBP/CHF continues to languish around all-time lows.However, while CHF (and safe haven) demand remains high, GBP could surprise in the long term.GBP appears undervalued on a longer-term basis. Sentiment, and a lack of confidence, appears to hold GBP back against safe haven currencies.As uncertainty unwinds, and as a new business cycle is able to assert itself, GBP stands a strong chance of rebounding (even outperforming).Plenty of uncertainty remains in the short to medium term, but 2021 (and beyond) could provide plenty of opportunity for the U.K. to surprise.

AUD/CHF crashed in Q1 2020, but the pair was able to promptly retrace its steps higher.However, the pair is currently trailing lower, perhaps for good reason considering the near-term risks.Near-term risks include the second wave of COVID-19 as we head into winter, in addition to the U.S. presidential election and Brexit.Nevertheless, longer-term sentiment should remain constructive. This matters especially for AUD/CHF, since the inflation-adjusted yield is weak.What we could see from AUD/CHF is a "J-curve" effect. The pair might struggle (or begin to trade sideways) in the near term, but its longer-term prospects could be bright, as the pair remains undervalued.

Growth expectations will certainly be reviewed to the downside in the coming months amid new restrictions imposed by governments.The lack of stimulus in addition to the rising uncertainty leaves stocks vulnerable in the short term.We are still long the US dollar and would avoid risk-on currencies such as the pound or the Aussie.

The Swiss franc has continued to strengthen in 2020, with both GBP/CHF and EUR/CHF weaker as compared to the year's opening prices.The strength of the Swiss franc is a threat to the Swiss economy, as it makes Swiss exports less competitive.Lowering the SNB's short-term interest rate further could be destabilizing. The only real alternative appears to involve heavier intervention.One solution could involve the SNB expanding its acquisitions of listed international assets. Reducing the level of intervention on the other hand (i.e., conceding to the U.S. Treasury) would be very risky.Therefore, while the outlook for CHF is mixed, the probability is building for further and aggressive intervention measures, and therefore, the possibility of an ultimate reversal to long-term CHF downside.

CAD/CHF is a "long-growth", "short-uncertainty" trade. CAD is correlated with the global energy sector, while CHF correlates with political instability.In a global economic recession, it is not surprising to see CAD falling and CHF strengthening.However, as CAD/CHF now rests at long-term lows, over the medium to long term, it is not unlikely that the current time will prove to be a turning point.CHF remains hotly demanded, likely owing mostly to short-EUR/CHF flows. However, as the world begins to rebound, the premium to own Swiss francs is likely to unwind, while the basis for owning Canadian dollars may improve.CAD/CHF may not be an especially appealing "long" trade at present, but the long-term trajectory from this current juncture is likely to favor upside.

US-dollar-denominated exchange reserves - that would be US Treasury securities, US corporate bonds, US mortgage-backed securities, etc. held by foreign central banks - rose 1.9% in the second quarter to $6.9 trillion, according to the IMF's COFER data release.The yen has backed off a little from its surge that had started in 2015, and peaked at 5.9% in Q4 2019 and Q1 2020. In Q2, it ticked down to 5.7%.The US dollar's status as the dominant reserve currency and as the dominant international funding currency creates a lot of demand for dollar-denominated instruments, and permits the US to fund its gigantic trade deficits and its even more gigantic fiscal deficits.

As expected, the Swiss National Bank yesterday held official policy steady, its benchmark lending rate remaining at -0.75%. Perhaps a bit unexpected, the SNB signaled its willingness to be more

Switzerland's central bank, the Swiss National Bank, has left the policy rates unchanged at minus 0.75%, maintaining the expansionary monetary policy in its interest rate decision Thursday.