- The USD/CHF falls almost 1.0%, going back from its highest level since June 23 in the middle of a massive sale of the US dollar.
- The US NFP report disappoints, with the US economy by adding only 73k jobs in July compared to the expected 110k.
- The probabilities of trimming of Fed’s interest rates in September were fired at 82.1% after the publication of the NFP, a drastic increase from the 37% prior to the data.
The Swiss Franco (CHF) is strengthened against the US dollar (USD) on Friday, since the US dollar is under strong pressure after the publication of the Julio Non -Agricultural Payroll (NFP) report. The weakest labor market data of what was expected triggered a massive sale of the USD, helping the USD/CHF to go back from maximums of several weeks.
At the time of writing, the USD/CHF is quoted about 0.8045 during US negotiation hours, lowering almost 1.0%, since the softest labor data increases bets for a rate cut in September. Meanwhile, the American dollar index (DXY), which tracks the value of the dollar against a basket of six main currencies, fell dramatically to 99.30 from a maximum of two months of 100.26 reached earlier in the day.
The latest employment data published by the US Labor Statistics Office showed that the economy added only 73,000 jobs in July, well below the expected 110,000, marking the weakest figure of this year. To add to the disappointment, the June figure was drastically reviewed to only 14,000 from 147,000 previously. The unemployment rate rose to 4.2%, in line with the forecasts, while the salary growth remained stable, with the average earnings per hour by increasing an intermennsual 0.3% and 3.9% year -on -year.
In the manufacturing sector, the final manufacturing PMI of S&P global (final) rose to 49.8 in July, slightly above the forecast of 49.7 and above the previous 49.5. However, the ISM manufacturing PMI, which is observed more closely, disappointed, falling to 48.0, well below the expectations of 49.5 and going down from 49.0 in June. The fall indicates a continuous contraction in the manufacturing activity and highlights the underlying weakness in the American economy in general.
After the weakest employment data than expected, market expectations for a rate cut in September were fired at 82.1%, a drastic increase from only 37% earlier in the day, according to the CME Fedwatch tool. The dramatic revaluation reflects a growing confidence that the Federal Reserve could be forced to make policy more flexible before the anticipated signs of weakness in the labor market.
On Thursday, US President Donald Trump signed an executive order that significantly reconfigures US commercial policy by introducing new “reciprocal” tariffs to more than five dozen countries. Switzerland is among the most affected, with exports to the US now facing a strong 39%tariff, well above 31% previously threatened. The Order will enter into force as of August 7 and mark an escalation on the Washington Protectionist commercial agenda, pointing to Swiss sectors such as luxury watches, precision instruments and machinery.
Speaking on Friday, Swiss President Keller-Sutter expressed a deep concern for the new 39%tariff, describing it as “very bad for the Swiss economy” and particularly harmful for key export sectors such as machinery and luxury watches. Although pharmaceutical products remain exempt, he emphasized that the sudden increase far exceeds what had previously been discussed, pointing out: “The previous discussions had been very constructive. A 39% tariff is much higher than it was negotiated.” Keller-Sutter added that Switzerland, which already has zero industrial tariffs and has promised investments in the US, finds “very difficult to offer more concessions.” He confirmed that Berna is still in contact with her American counterparts and seeks a diplomatic resolution to avoid more economic repercussions.
Swiss economy – Frequently asked questions
Switzerland is the largest economy in the European continent in terms of gross domestic (GDP) nominal. If measured by GDP per capita (a wide measure of the average standard of living), the country is among the highest in the world, which means that it is one of the richest countries in the world. Switzerland tends to be in the first places of world classifications on standard of living, development, competitiveness or innovation rates.
Switzerland is an open and free market economy based mainly on the services sector. The Swiss economy has a strong export sector and the neighboring European Union (EU) is its main commercial partner. Switzerland is an important watches exporter and houses important companies in food, chemistry and pharmaceutical industries. The country is considered an international fiscal paradise, with corporate tax rates and significantly low income compared to its European neighbors.
As a country of high income, the growth rate of the Swiss economy has decreased in recent decades. Even so, its political and economic stability, its high levels of education, top -level companies in various industries and their fiscal paradise status have made it a preferred destination for foreign investment. This has generally benefited the Swiss Franco (CHF), which has historically remained relatively strong in front of its main monetary pairs. In general, a good performance of the Swiss economy – based on high growth, under unemployment and stable prices – tends to appreciate the CHF. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
Switzerland is not an exporter of raw materials, so, in general, their prices are not a key factor for the Swiss Franco (CHF). However, there is a slight correlation with gold and oil prices. In the case of gold, the condition of the CHF as an active refuge and the fact that the currency used to be backed by the precious metal means that both assets tend to move in the same direction. In the case of oil, a document published by the Swiss National Bank (SNB) suggests that the increase in oil prices could negatively influence the assessment of the CHF, since Switzerland is a net fuel importer.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
