USD/CHF falls below 0.8000 after weak labor data fuels possible Fed cuts

The Swiss Franc gains ground against the Dollar this Friday. The USD/CHF slips below 0.8000, hitting lows since July. Right now, the pair is around 0.7972, falling nearly 1.0% on the day. The Dollar faced strong pressure after disappointing American employment data. All the gains from the beginning of the week... wiped out.

Price of the Swiss Franc Today

The table shows how the CHF behaves against other currencies. It seems that the Franc is particularly strong against the Canadian Dollar.

| | USD | EUR | JPY | CAD | AUD | NZD | CHF | |---|-----|-----|-----|-----|-----|-----|-----| | USD | - | -0.59% | -0.69% | 0.21% | -0.60% | -0.73% | -0.95% | | EUR | 0.59% | - | -0.17% | 0.80% | 0.07% | -0.13% | -0.36% | | JPY | 0.69% | 0.17% | - | 0.97% | 0.16% | -0.02% | -0.10% | | CAD | -0.21% | -0.80% | -0.97% | - | -0.76% | -0.94% | -1.13% | | AUD | 0.60% | -0.07% | -0.16% | 0.76% | - | -0.23% | -0.40% | | NZD | 0.73% | 0.13% | 0.02% | 0.94% | 0.23% | - | -0.19% | | CHF | 0.95% | 0.36% | 0.10% | 1.13% | 0.40% | 0.19% | - |

The heat map reflects percentage changes between currencies. The base is chosen from the left, the quoted from above.

The drop comes after a shift in market sentiment. The August NFP report confirmed the labor cooling. Only 22,000 new jobs. Well below the expected 75,000. The Unemployment Rate rose to 4.3%, a level not seen since late 2021. Wages grew as expected, but the overall weakness reinforced the idea of a rate cut this month.

Traders were already anticipating a 25-point cut. Now there is a 12% probability of a 50-point move. Previously it was zero. Interesting turn.

The Dollar weakened on all fronts after this data. The DXY fell to lows not seen since July before stabilizing around 97.50. Treasury yields also plummeted. The 10-year bond fell to 4.08%. The 2-year bond fell to 3.49%. Both at their lowest since April.

Kevin Hassett from the White House called the report "a little disappointing." He noted that inflation remains low and economic growth is solid. "An independent Fed is really important for growth," he told CNBC. Data revisions complicate the picture. "We need to do a better job of adjusting the data," he added. Regarding monetary policy, he sees "reasons for optimism" but acknowledged that the Fed "could discuss a larger cut."

The focus is now on the CPI next Thursday. It will be key for expectations regarding the Fed. Persistent inflation remains a risk. A softer data point would likely strengthen expectations for a larger cut. The dollar would remain under pressure. We'll see.