Swiss Franc Slips as USD/CHF Rebounds Ahead of US Jobs Data

Key Moments

USD/CHF Rebounds as Dollar Holds Gains

USD/CHF advanced during Asian trading on Friday, changing hands near 0.8080 after posting losses in the previous session. The pair moved higher as the US Dollar regained earlier intraday declines and held on to its recovery. However, the scope for further upside in the Greenback appeared constrained as markets reassessed expectations for a more aggressive Federal Reserve policy path. Traders were also watching upcoming Swiss Unemployment Rate data later in the day for additional direction on the Swiss Franc.

Fed Messaging Shifts Market Rate Expectations

Federal Reserve Governor Christopher Waller signaled a preference for leaving interest rates unchanged at the September policy meeting, contingent on the absence of major surprises in upcoming inflation readings. His remarks carried a noticeably more dovish tone compared with the hawkish stance articulated by Chairman Kevin Warsh just one week earlier.

Following Waller’s comments, rate expectations adjusted swiftly. The CME FedWatch tool showed that the implied probability of a September rate increase dropped to 50.2%, a notable decline from 63.2% the day before.

Focus Turns to US Labor Data

With rate expectations in flux, investors shifted their attention to the upcoming US August employment report for further insight into the Federal Reserve’s policy trajectory. Current market projections point to an increase of 56,000 in Nonfarm Payrolls, while the Unemployment Rate is anticipated to remain unchanged at 4.1%.

Swiss Inflation Surprise Supports CHF Narrative

Analysts at Brown Brothers Harriman pointed to a notable upside surprise in Swiss inflation. They highlighted that headline CPI rose to “0.8% y/y (consensus: 0.5% y/y) vs. 0.4% in July.” According to their analysis, this marks “the highest since September 2024” and exceeds “the SNB’s Q3 forecast of 0.6% y/y,” reinforcing the view that underlying price pressures are strengthening.

BBH further emphasized that price gains were not limited to headline figures. They noted that “core CPI inflation also surprised to the upside at 0.4% y/y (consensus: 0.3%), following four straight 0.3% readings,” which they see as evidence of a gradual and broad-based rise in Swiss inflation.