USD/CHF extended its downtrend for the fourth consecutive day on Monday, hovering around 0.9050 during European trading hours. The persistently weaker US Dollar (USD) exerted downward pressure on the USD/CHF pair, driven by renewed expectations for potential interest rate cuts by the US Federal Reserve (Fed) later in the year. This sentiment stems from the softer-than-expected US jobs data released on Friday.
The US Nonfarm Payrolls report for April revealed that the US economy added 175,000 new jobs, falling short of the estimated 243,000 and signaling a notable slowdown from March’s addition of 315,000 jobs. Moreover, Average Hourly Earnings (YoY) increased by 3.9% in April, slightly below the anticipated 4.0% and the prior figure of 4.1%. Monthly growth stood at 0.2%, compared to the expected 0.3%.
Market expectations now lean towards the Federal Reserve implementing its first rate cut in September, deviating from previous forecasts that indicated November. According to the CME FedWatch Tool, the probability of a 25 basis points (bps) rate reduction during September’s meeting has surged to 48.8%, up from 43.8% just a week ago.
On the Swiss side, data released last Thursday revealed that annual inflation in Switzerland accelerated more rapidly than anticipated in April. The Swiss Consumer Price Index (CPI) inflation rose to 1.4% year-on-year, surpassing the market consensus of 1.1% and marking a notable increase from March’s 1.0%. This unexpected uptick has provided support to the Swiss Franc (CHF).
In the upcoming trading session, market participants are poised to closely monitor a speech by Swiss National Bank (SNB) Chairman Thomas Jordan at the SNB’s Project Helvetia III during the BIS Innovation Summit 2024 in Basel. Jordan’s remarks are anticipated to offer fresh insights into the Swiss economy and potential policy directions, which could influence further movements in the USD/CHF pair.
