The Swiss Franc is on track for its first weekly gain in five weeks against the US Dollar, following a weaker-than-expected US jobs report that has pushed back market expectations for further Federal Reserve rate hikes. The USD/CHF pair fell 0.6% on Friday, extending its weekly decline as traders recalibrated their outlook for US monetary policy.
The US Bureau of Labor Statistics reported on Friday that the economy added 175,000 jobs in April, well below the 240,000 forecast by economists polled by Reuters. The unemployment rate ticked up to 3.9%, while average hourly earnings rose 0.2% month-over-month, missing the 0.3% consensus estimate.
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Market Reaction and Fed Rate Path
The soft labor market data has strengthened the case for the Federal Reserve to hold interest rates steady at its next policy meeting in June. According to the CME FedWatch Tool, the probability of a rate cut in September rose to 48%, up from 38% before the release.
The Swiss Franc, traditionally a safe-haven currency, has benefited from the shift in expectations. The USD/CHF pair, which had risen for four consecutive weeks as the US economy showed resilience, reversed course as the greenback lost momentum.
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Broader Currency Market Impact
The weak NFP data also weighed on the US Dollar Index, which fell 0.4% to 105.20, its lowest level in over a week. The euro and the Japanese yen both strengthened against the dollar, reflecting a broad-based selloff in the US currency.
Analysts at ING noted in a research note that “the NFP miss significantly reduces the likelihood of a hawkish surprise from the Fed, which had been supporting the dollar in recent weeks.” They added that the Swiss Franc could extend its gains if risk sentiment remains fragile.
What to Watch Next
Traders will now focus on upcoming US inflation data, including the Consumer Price Index release scheduled for next week. A continued cooling in price pressures would further undermine the case for rate hikes and could provide additional support for the Swiss Franc.
The Swiss National Bank, which has intervened in currency markets in the past to curb Franc strength, is unlikely to act at current levels, as the currency remains well below the highs seen earlier this year.
Frequently Asked Questions
What is the Swiss Franc’s weekly performance against the US Dollar?
The Swiss Franc is on track for its first weekly gain in five weeks, with the USD/CHF pair declining as the US Dollar weakened.
How did the NFP report affect the Swiss Franc?
The weaker-than-expected Nonfarm Payrolls report reduced expectations for a Federal Reserve rate hike, which pressured the US Dollar and boosted the Swiss Franc.
What does this mean for the Federal Reserve’s next move?
The weak jobs data has led traders to push back expectations for a rate hike, with markets now pricing in a lower probability of a move at the next Federal Open Market Committee meeting.
