Market Analysis

USD/CHF extended its downward trend for the fourth consecutive day on Monday, hovering around the 0.9050 level during European trading hours. The ongoing weakness in the US Dollar (USD) is exerting pressure on the USD/CHF pair, which is largely attributed to renewed expectations of potential interest rate cuts by the US Federal Reserve (Fed) later in the year. This sentiment stems from the disappointing US jobs data released on Friday.

The latest US Nonfarm Payrolls report revealed that the American economy added 175,000 new jobs in April, falling short of the estimated 243,000 and indicating a notable slowdown from March's addition of 315,000 jobs. Additionally, Average Hourly Earnings (YoY) increased by 3.9% in April, slightly below the anticipated 4.0% and the previous month's 4.1%. Meanwhile, monthly wage growth stood at 0.2%, compared to the expected 0.3%.

Market expectations now point towards the Fed implementing its first rate cut in September, deviating from earlier forecasts that suggested November. According to the CME FedWatch Tool, the likelihood of a 25 basis points (bps) rate reduction during the Fed's September meeting has risen to 48.8%, up from 43.8% just a week ago.

On the Swiss front, recent data released on Thursday showed that annual inflation in Switzerland accelerated more than anticipated in April. The Swiss Consumer Price Index (CPI) inflation rose to 1.4% year-on-year in April from a previous increase of 1.0% in March, surpassing market expectations of 1.1%. This unexpected uptick has bolstered the Swiss Franc (CHF).

Looking ahead to Monday's trading, investors are expected to closely monitor a speech by Swiss National Bank (SNB) Chairman Thomas Jordan at the SNB's Project Helvetia III during the BIS Innovation Summit 2024 in Basel. Jordan's remarks could provide fresh insights into the economic outlook and policy direction.

Paraphrasing text from "FX Street" all rights reserved by the original author.