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Swiss Franc gains against US Dollar after surprise decline in US payrolls

  • USD/CHF falls as disappointing US Nonfarm Payrolls weigh on the US Dollar.
  • Fed rate-hike expectations fall following the jobs report, shifting attention to next week’s US CPI data.
  • Carry-trade demand and the SNB’s zero-rate policy keep the Swiss Franc under pressure.

USD/CHF edges lower on Friday, erasing most of the previous day’s gains as the US Dollar (USD) weakens following a downside surprise in the US Nonfarm Payrolls (NFP) report. At the time of writing, the pair trades around 0.8080, down 0.53% on the day.

The US economy lost 23K jobs in July, even though economists had expected an increase of 80K. June’s employment gain was also revised down to 20K from the previously reported 57K. However, the Unemployment Rate fell to 4.1% from 4.2%.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades around 99.60, down nearly 0.33% on the day, after touching an intraday low of 99.41.

Commenting on the report, Richmond Fed President Thomas Barkin said the jobs data were “more low hire, low fire” and “very consistent with a sector in weak balance.” He also stressed that the Fed “will get inflation to 2%.”

Following the data, the probability of a Federal Reserve (Fed) rate hike at the September meeting fell to around 42% from 54% immediately before the release, according to the CME FedWatch Tool. A cooler inflation reading may be needed to push rate-hike expectations further lower, so traders now look to next week’s US Consumer Price Index (CPI) report.

Despite Friday’s gains against the US Dollar, the broader outlook for the Swiss Franc remains weak. Analysts at OCBC highlight that the Swiss Franc (CHF) "remains under pressure as carry trade funding demand grows and the SNB appears comfortable with a weaker currency." They note that "carry trade funding pressures continue to weigh on the CHF, while recent JPY intervention may have further cemented the CHF’s role as the market's preferred funding currency."

With "inflation subdued and policy rates likely anchored at zero," OCBC expects that "CHF weakness could persist into year-end," adding that, as a consequence of these dynamics, "the CHF is the worst-performing G10 currency against the USD so far in 3Q26."

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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