The Swiss Franc (CHF) weakened against the US Dollar (USD) ahead of the release of Swiss Unemployment Rate data, with the USD/CHF pair trading around 0.8080 during Asian hours on Friday after recovering from previous losses [1]. The US Dollar's gains were supported by a recovery in daily losses, although the upside was seen as potentially limited due to a less hawkish outlook from the Federal Reserve (Fed) [1]. Fed Governor Christopher Waller indicated a preference for keeping interest rates unchanged at the upcoming September meeting, provided inflation data remains stable, which marked a dovish shift compared to the hawkish stance of Chairman Kevin Warsh a week earlier [1]. This shift led to a notable change in market expectations, with the CME FedWatch tool showing the probability of a September rate hike dropping to 50.2%, down from 63.2% the previous day [1].
Market participants are now focusing on the upcoming US August employment report for further guidance on monetary policy, with consensus forecasts projecting Nonfarm Payrolls to increase by 56,000 jobs and the Unemployment Rate to remain steady at 4.1% [1].
On the Swiss side, analysts at Brown Brothers Harriman highlighted that Swiss inflation data surprised to the upside, with headline CPI rising to 0.8% year-over-year (consensus: 0.5% y/y) compared to 0.4% in July, marking the highest level since September 2024 and exceeding the Swiss National Bank’s (SNB) Q3 forecast of 0.6% y/y [1]. Core CPI inflation also rose to 0.4% y/y (consensus: 0.3%), following four consecutive months at 0.3%, indicating a gradual but broad-based pickup in Swiss inflation [1].
Despite the current weakness in the Swiss Franc, the upside surprise in inflation could provide support for the currency, as it reinforces the perception of firming underlying price pressures in Switzerland [1].
CONCLUSION
The Swiss Franc weakened against the US Dollar amid shifting Fed rate expectations and ahead of key employment data releases. However, stronger-than-expected Swiss inflation data may offer support to the Franc, as it exceeds the SNB’s forecast and signals rising price pressures. Market participants remain attentive to upcoming US and Swiss economic data for further direction.