Looking to open new short positions against weakest currencies (AUD, NZD, CAD, GBP) by the opening of the week, month, quarter and semester we are now hesitating between selling them against the Swiss Franc (CHF) or the Japanese Yen (JPY).
Now the question that arises is, which of the two is the strongest and expected to offer better returns. Trying to solve such a conundrum it is always a good idea to compare both currencies with each other from a longer term perspective. We are now comparing the CHF/JPY exchange rate on the 2-Year and 6-Month durations.
CHFJPY Two-Year (left) and 6-Month (right) Exchange Rate
On the 2-year timeframe the pair is consolidating its very strong advance from 2012-2013 and drifting laterally but remains strongly supported and thus a bounce is expected here.
On the 6-month time frame the trend is showing up and the rate should move above the 7-period moving average by the opening of the new 6-month period, which is equally supportive for the Swiss Franc to outperform the Japanese Yen.
Any short term weakness of the rate is expected to be well contained, which makes the Swiss Franc a better candidate to buy against weaker currencies we intend to sell short.