The US Dollar gained ground against both the Swiss Franc and the Euro during Asian trading on Monday, buoyed by stronger-than-expected US employment data and rising expectations of a Federal Reserve interest rate hike in September [1][2]. The USD/CHF pair appreciated for the second consecutive day, trading around 0.8110, as August Nonfarm Payrolls rose by 162,000, significantly surpassing the 56,000 forecast, while the unemployment rate held steady at 4.1% and annual wage growth slowed less than anticipated to 3.1% [1]. Similarly, the EUR/USD traded marginally lower at around 1.1610, with investors turning cautious ahead of the US Consumer Price Index (CPI) release later in the week [2].
Market participants rapidly priced in tighter US monetary policy following the jobs report, with the CME FedWatch tool indicating a 58.3% probability of a 25-basis-point Fed rate increase in September [1]. Deutsche Bank analysts highlighted that the upcoming August US CPI and Producer Price Index (PPI) releases are the last major inflation readings before the Fed's next decision on September 16, forecasting headline CPI to rise by 0.38% month-on-month versus 0.07% previously, while core CPI is expected to remain contained at 0.21% [2].
The US Dollar also found support from rising crude oil prices, which have stoked inflation fears following a geopolitical escalation between the US and Iran over the weekend. The conflict intensified after the US targeted three Iranian tankers in response to missile attacks on its warships, prompting Tehran to establish a new restricted zone around the Strait of Hormuz [1].
On the Swiss side, the Franc lost appeal as a funding currency for carry trades, despite Swiss inflation doubling in August and quarterly economic growth accelerating to its highest level in nearly five years [1]. Headline Swiss CPI rose to 0.8% year-on-year, above consensus and the Swiss National Bank's (SNB) Q3 forecast, while core CPI also surprised to the upside at 0.4% year-on-year [1]. However, a Swiss Bankers Association survey indicated that all responding bankers expect the SNB to hold its policy rate at 0% through year-end, with markets pricing in the first rate hike for June 2027 and most economists projecting a hike in early 2028 [1].
Technical analysis for EUR/USD shows the pair holding above the 100-day Simple Moving Average at 1.1563, with the Relative Strength Index at 54 indicating neutral momentum. Key resistance levels are noted at 1.1679 and 1.1849, while support lies at 1.1563 and 1.1500 [2].
CONCLUSION
Stronger-than-expected US jobs data and rising Fed rate hike expectations have driven the US Dollar higher against both the Swiss Franc and the Euro, with markets now focused on upcoming US inflation data for further policy cues. Despite robust Swiss economic indicators, the SNB is expected to maintain its current policy stance for the foreseeable future. The market's attention remains on the US CPI release, which could further influence Fed policy expectations and currency movements.