USD/CHF declines towards 0.9050 as Fed policymakers advocate a pause, US NFP eyed

The USD/CHF pair is in a declining stage in early Asia and is expected to drop further toward the crucial support of 0.9050. The Swiss Franc asset witnessed a steep fall after dovish commentary from Federal Reserve (Fed) policymakers.

S&P500 futures have added some gains in Asia after a bullish Thursday, portraying a risk-appetite theme. Fed policymakers’ dovish commentary infused fresh blood into risk-perceived assets and weighed heavily on the US Dollar Index (DXY).

The US Dollar Index (DXY) is gauging an intermediate support around 103.50 after an intense sell-off move. Philadelphia Federal Reserve Bank President Patrick Harker stated on Thursday that he believes it is time for the central bank to 'hit the stop button' for at least one meeting, reiterating his comments from Wednesday about a potential pause at the next meeting. Harker argued that such a move would be prudent at this time.

Regarding economic outlook, Fed Harker is confident that there will be no recession in the United States economy, however, a significant deterioration in the labor market cannot be ruled out.

Going forward, the release of the US Nonfarm Payrolls report will provide more clarity about the Employment status. Analysts at Danske Bank stated “We expect to see another relatively upbeat US Jobs Report. So far the signals from leading data have pointed towards healthy employment growth, which could be further supported by a renewed uptick in labor force participation. We think NFP grew by a solid 200K.”

On the Swiss Franc front, annual Real Retail Sales (April) contracted significantly by 3.7% while the street was anticipating a contraction of 1.4%, and previous data was contracted by 1.9%. On Wednesday, Swiss National Bank (SNB) Chairman Thomas Jordan cited that they have to bring inflation back below 2% as soon as possible and noted that he sees inflation risks higher than deflation in the future, due to deglobalization.