Following the post ECB easing season in early December that has delivered less than forecasted, subsequently the SNB also stood pat from easing. It still threatens to do more if necessary but shows a reluctance to deliver on that threat - i.e. the SNB does not seem likely to cut rates.

On the flip side, Our official forecast calls for two more cuts from the RBA in H1 2016 though there is a higher risk now that those cuts are delayed.

Recent data have been very positive, AU economic surprise indicator maxed out at +100 for a couple of weeks, i.e. all the data tracked by analysts were beating expectations.

Labor data were particularly strong, though there are sample rotation effects at play.

So contemplating all booming fundamentals that drive all chances of central bank's rate cut but as other data on output growth are also slightly firmer, the RBA may choose to wait, assessing what is noise vs. signal.

So we think during such uncertain opinions from both sides of central banks it is wise to adopt currency hedging strategies to mitigate AUD/CHF potential downside risks.

For now, downtrend in long term is certain with abrupt rallies, so we are capitalizing on this ongoing downtrend by using recovery rallies with an objective of profit maximization.

We nearly replicated the short spot FX position by buying OTM puts and selling OTM calls. The net result is a virtually nil cost or even net credit trade that has uncapped risk potential as the AUDCHF rises.

At current spot FX of AUD/CHF at 0.7167, go long 1M 1.5% out of the money -0.49 delta puts and simultaneously sell 1.5% out of the money calls  with comparatively shorter expiry (probably 7, 10 or 15 days' time frame as suitable conditions).

Advantage: With this strategy, you use no capital or negligible capital and yet are able to simulate a short spot FX position, and the ability to leg in and leg out as you wish.