USD/CHF remains below 50-day SMA hurdle near 0.8540 ahead of US NFP

USD/CHF consolidates in a range below the 50-day SMA as traders await the US NFP report.
A modest USD pullback from a one-month high is seen as a key factor capping the major.
Reduced bets for a 50 bps Fed rate cut in November lend support to the USD and the pair.

Haresh Menghani FXStreet

The USD/CHF pair reverses an intraday dip to the 0.8500 psychological mark and climbs back closer to a three-week top during the first half of the European session on Friday. Spot prices, however, remain below the 50-day Simple Moving Average (SMA), warranting some caution for bullish traders ahead of the release of the US monthly employment details.

The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the economy added 140K jobs in September, slightly lower than the 142K in the previous month, and the Unemployment Rate held steady at 4.2%. Apart from this, Average Hourly Earnings might provide cues about the size of the Federal Reserve's (Fed) rate cut in November. This, in turn, will play a key role in driving the US Dollar (USD) demand and determining the next leg of a directional move for the USD/CHF pair.

Ahead of the key data, some repositioning trade drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, away from a one-month high touched on Thursday. This, in turn, acts as a headwind for spot prices amid a further escalation of geopolitical tensions in the Middle East. That said, reduced bets for an oversized rate cut by the Federal Reserve (Fed) in November limit the USD losses and support prospects for a further appreciating move for the USD/CHF pair.

Nevertheless, spot prices seem poised to register strong weekly gains, though remain confined in a multi-week-old trading range. This makes it prudent to wait for sustained strength and acceptance above the 50-day SMA hurdle, around the 0.8540 region, before positioning for an extension of this week's goodish rebound from sub-0.8400 levels, or the lower end of the short-term range.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD edges higher to mid-1.1600s; looks to US PCE Price Index for fresh impetus

The EUR/USD pair attracts some dip-buyers during the Asian session on Friday and recovers a part of the previous day's retracement slide from the 1.1680 region, or the highest level since October 17. Spot prices currently trade around mid-1.1600s and remain on track to register gains for the second straight week.

GBP/USD attempts some consolidation near 1.3350

GBP/USD is alternating gains with losses near 1.3350 on Thursday. The Greenback’s attempts to recover aren't really sticking, upbeat data or not, as traders stay confident that the Fed will deliver a 25 bps rate cut at its final meeting of the year.

Gold bull-bear tug-of-war extends ahead of US data

Gold struggles around $4,200 early Friday, eyes a modestly flat close to the week. US Dollar turns south alongside Treasury bond yields amid Fed rate cut buzz. Gold remains confined within a tight range; buyers refuse to give up yet.

XRP slides amid record on-chain activity, mixed technical signals

Ripple (XRP) is trading under pressure at the time of writing on Thursday, after bulls failed to break the short-term resistance at $2.22. The reversal may extend toward Monday’s low of $1.98, especially if risk-off sentiment persists in the broader cryptocurrency market.

Why the Fed may cut rates in December: Understanding the policy shift

The Fed has gone through a noticeable policy swing in recent months - from initiating a rate cut, to signaling a potential pause, and now shifting once again toward another cut in December. This has created understandable confusion among traders and investors trying to interpret the Fed’s reaction function.

XRP edges lower despite record on-chain activity and steady ETF inflows

Ripple is trading under pressure at the time of writing on Thursday, after bulls failed to break the short-term resistance at $2.22. The reversal may extend toward Monday’s low of $1.98, especially if risk-off sentiment persists in the broader cryptocurrency market.