- The USD/CHF is expected to strengthen to around 0.8090 during the early European session on Tuesday.
- From August 7th, Swiss imports will be subject to a 39% tariff from the US, impacting the Swiss franc significantly.
- A disappointing US Non-Farm Payroll report has raised speculation that the Federal Reserve may resume rate cuts in September.
During the early European trading hours on Tuesday, the USD/CHF pair is predicted to be in a positive range, hovering around 0.8090. The Swiss franc is losing ground against the US dollar after President Donald Trump announced a surprising 39% tariff on imports from Switzerland. However, increasing expectations of potential interest rate cuts by the Federal Reserve in September could limit further increases in this pair. Later in the day, attention will be on the US July ISM Service Purchase Manager Index (PMI) data.
Trump’s threat to impose a 39% tariff on Swiss imports—among the highest in the world—has caused significant concern in Switzerland, which heavily relies on exports. In response, the Swiss government stated it is prepared to offer more favorable terms in trade discussions with the US. Still, it’s uncertain whether meaningful progress will be made before a looming deadline, which adds pressure on the Swiss franc and may bolster the USD/CHF pair.
The US Non-Farm Payroll report released Friday was weaker than anticipated, highlighting a slowing labor market and fueling speculation regarding a potential resumption of rate cuts by the Fed in September. Market expectations now suggest there’s an 84% chance the Fed will implement a 25 basis point cut in their September meeting, as indicated by the CME FedWatch tool.
Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, mentioned Monday that rate cuts might be on the horizon due to signs of a cooling job market and a lack of persistent inflation caused by tariffs. This recent employment data, along with dovish comments from Fed officials, could reduce the value of the US dollar against the Swiss franc temporarily.
