Market Update: USD/CHF Stabilization

• The USD/CHF pair has stabilized around 0.7940, recovering from its recent low since July 24th.
• Traders are looking forward to the revisions of the NFP benchmark, which are set for 14:00 GMT.
• The market has priced in a 25 basis point rate cut from the Federal Reserve during their meeting on September 16-17, though a 50 basis point reduction could happen if data comes in weaker than expected.

On Tuesday, the Swiss Franc (CHF) is expected to weaken a bit against the US Dollar (USD). The USD/CHF pair has stabilized after a two-day decline, with the greenback slowly recovering from a low it hasn’t seen in seven weeks. Traders are cautiously awaiting the revised version of the preliminary benchmark from the US Bureau of Labor Statistics (BLS) for the Non-Farm Payroll (NFP), anticipated at 14:00 GMT. There’s an expectation that this revision will reveal that job growth over the past year has been overstated, underscoring a faster cooling in the US labor market than previously thought.

As of now, the USD/CHF has been fluctuating around 0.7945 since July 24th, even after temporarily dropping to its lowest point during recent trading hours. This slight rebound seems to indicate a preliminary recovery for the greenback, bolstered by market positioning ahead of the upcoming data and slight upticks in US Treasury yields.

At the time of writing, the US Dollar Index (DXY) tracked a basket of six major currencies, dropped to a seven-week low but has since found stability near 97.50. Following last week’s disappointing non-farm payroll (NFP) report, the index suggests that central banks might prioritize employment above price stability in their dual mandates.

Future NFP revisions may potentially lower previously reported payroll figures by about 475,000 to 1 million jobs from the past year leading up to March 2025. Today’s revision is expected to serve as a final confirmation since recent indicators have also pointed toward a slowdown. A 25 basis point cut seems to be the consensus, but some market participants are eyeing a more aggressive stance with a potential 50 bps reduction if the data indicates a more severe labor market correction.

Looking ahead, traders will keep an eye on the US Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday for insights into inflation trends. Strong data could dampen expectations for more aggressive easing from the Federal Reserve, while weaker results might lend support for more significant rate cuts. On Switzerland’s end, attention will be on the speech by Martin Schlegel, chairman of the Swiss National Bank (SNB), scheduled for Wednesday. He recently mentioned that while the barriers to reintroducing negative interest rates remain “high,” central banks are prepared to act as necessary.