The USD/CHF pair is trading slightly higher during Friday’s Asian session but remains near its critical support level of 0.8883. In recent trading sessions, the Swiss Franc has been under pressure as the US Dollar struggles to gain traction amid increasing speculation that the Federal Reserve (Fed) will begin reducing interest rates from September.
Expectations of the Fed cutting rates have boosted the appeal of risky assets. S&P 500 futures have shown significant gains during the Tokyo session, reflecting improved market sentiment. Meanwhile, the US Dollar Index (DXY) remains stable near 104.00 ahead of the United States Nonfarm Payrolls (NFP) data for May. The 10-year US Treasury yields have rebounded to 4.30%, although they are still down from last week’s peak of 4.62%.
Traders are increasingly betting that the Fed will lower its key borrowing rates in September, prompted by signs of a normalizing labor market. This week’s weaker-than-expected JOLTS Job Openings data for April and the ADP Employment Change for May suggest easing labor demand. Additionally, the higher-than-expected initial jobless claims for the week ending May 31, which came in at 229K against an estimate of 220K and the prior week’s 221K, have further fueled doubts about the labor market’s strength.
Today’s US NFP report is anticipated to provide crucial insights into the health of the US labor market and could significantly influence market expectations regarding the Fed’s monetary policy.
Concurrently, the Swiss Franc has shown relative strength against the US Dollar in recent sessions. This strength is driven by expectations that the Swiss National Bank (SNB) may intervene in the currency markets to bolster the Franc and manage inflationary pressures. The demand for Swiss exports has strengthened globally, spurred by a weaker Swiss Franc, which has increased the competitiveness of Swiss goods.
Key Levels to Watch:
Support: 0.8883
Resistance: N/A
Trend Forecast:
The USD/CHF pair’s movement will likely hinge on the upcoming US NFP report and further signals from the Fed regarding interest rate policy. The SNB’s potential interventions to support the Swiss Franc will also play a crucial role in shaping the pair’s direction in the near term.
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