The USD/CHF pair is showing resilience, trading near 0.8640 during the early European session on Friday. This rebound in the US Dollar (USD) is bolstered by expectations surrounding the upcoming US employment report, set to be released later in the day.
Recent US economic data has consistently surprised to the upside over the past two months, suggesting that the US Federal Reserve (Fed) should adopt a patient approach regarding its easing policy in upcoming meetings. Financial markets are currently pricing in approximately a 90% chance that the Fed will implement a 25 basis point (bps) rate cut next week, a reduction from the previously anticipated 50 basis point cut in September, according to the CME FedWatch tool.
However, the Fed may closely consider the forthcoming Nonfarm Payrolls (NFP) data, which is projected to show an addition of 113,000 jobs in October, with the unemployment rate expected to hold steady at 4.1%. A significant cooling in the job market could lead the Fed to adopt a more aggressive rate-cutting stance, potentially weighing on the USD. Some of the labor market weakness, however, may be influenced by temporary distortions stemming from Hurricane Helene.
On the Swiss side, a risk-off sentiment, fueled by uncertainty surrounding next week’s US presidential election and ongoing geopolitical tensions in the Middle East, could increase safe-haven flows, benefiting the Swiss Franc (CHF). Reports indicate that two separate Hezbollah rocket attacks have resulted in seven fatalities in northern Israel, marking the deadliest day of such incidents in months, according to the BBC.
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