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USD/CHF trades lower as Swiss Bond yields rise, Fed rate cut bets ease

  • USD/CHF trades lower around 0.7680 on Thursday despite strong US labor data.
  • Swiss 10-year government Bond yields climb to the highest level since December, boosting the appeal of the Swiss Franc.
  • Markets scale back Federal Reserve rate cut bets after stronger-than-expected job creation.

USD/CHF falls toward 0.7680 on Thursday at the time of writing, down 0.48% on the day, after two consecutive days of gains. The pair remains under pressure as the Swiss Franc (CHF) benefits from sustained safe-haven demand and rising domestic yields.

Switzerland’s 10-year government Bond yield reaches 0.32%, its highest level since December, increasing the attractiveness of Swiss Franc-denominated assets for international investors. Higher yields support capital inflows and lend strength to the Swiss currency, limiting the upside potential for the pair.

The Swiss National Bank (SNB) is expected to keep its policy rate at 0% in the coming months, as inflation remains close to target and the bar for reintroducing negative rates stays high. Investors are now focused on Friday’s Switzerland January Consumer Price Index (CPI), which is expected to show annual inflation holding steady at 0.1%.

Analysts at Commerzbank believe that risks to headline inflation are skewed to the upside due to the recent rise in Oil prices, which could quickly feed into transport costs. According to the bank, an upside surprise in inflation would provide some relief to the Swiss National Bank by reducing pressure for further easing. "We see a risk of an upside surprise for the headline rate: the Oil price rose by roughly 10 USD in January, and rising oil prices usually have a quick effect on Swiss transport prices – a component which is currently making a significant negative contribution to the headline rate", noted the bank.

On the US side, the US Dollar (USD) remains supported following the release of solid labor market data. The Nonfarm Payrolls (NFP) report showed that 130,000 jobs were added in January, above market expectations of 70,000, while the Unemployment Rate declined to 4.3% from 4.4%.

Following these figures, expectations for near-term rate cuts by the Federal Reserve (Fed) are pared back. The CME FedWatch tool indicates that around 94% of investors now expect the Fed to leave rates unchanged at its next meeting, up from 80% before the jobs report. The chances of easing in March and April decline significantly, although markets still see a potential first rate cut in June.

Swiss Franc Price Today

The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.04%-0.12%0.17%-0.02%0.00%-0.32%-0.31%
EUR0.04%-0.09%0.26%0.01%0.04%-0.28%-0.27%
GBP0.12%0.09%0.34%0.10%0.13%-0.19%-0.19%
JPY-0.17%-0.26%-0.34%-0.27%-0.23%-0.59%-0.55%
CAD0.02%-0.01%-0.10%0.27%0.04%-0.30%-0.29%
AUD-0.01%-0.04%-0.13%0.23%-0.04%-0.33%-0.32%
NZD0.32%0.28%0.19%0.59%0.30%0.33%0.00%
CHF0.31%0.27%0.19%0.55%0.29%0.32%-0.01%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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