USD/CHF – Swiss franc sinks on SNB’s Jordan, nonfarm payrolls

• SNB’s Jordan says cannot exclude further hikes
• US nonfarm payrolls rise unexpectedly
• USD/CHF soars by 100 points

The Swiss franc has taken riders on a roller-coaster ride this week. On Wednesday, USD/CHF plunged 1% but it has recovered all of these losses on Friday, courtesy of Swiss National Bank President Jordan and a strong nonfarm payrolls release.

SNB’s Jordan says rate hike on the table

Swiss National Bank President Jordan had a hawkish message for the markets today, saying that he could not exclude further rate hikes in order to curb high inflation. Everything is relative, as Switzerland’s inflation rate of under 3% would be a dream come true for most central bankers. The April inflation report, released earlier today, indicated that CPI eased to 2.6%, down from 2.9% in March and below the 2.6% consensus. Despite the decline, the SNB remains concerned, as CPI has been above the Bank’s target of 0-2% since February 2022. The SNB has been aggressive and raised rates four straight times at its quarterly meetings, but inflation has proven to be stubborn. The central bank meets next on June 22^nd and a rate hike is a strong possibility unless the next inflation report on June 5^th shows that inflation continues to decelerate.

US nonfarm payrolls beat expectations

US nonfarm payrolls rose to 253,000 in April, following the March release that was revised downwards to 165,000. This beat the consensus of 179,000 and indicates that the US labour market remains robust, despite 10 straight rate hikes from the Fed. The strong data has boosted the US dollar and dampened market expectations for a July rate cut of 25 bp, which have fallen from around 50% prior to the nonfarm payroll release to 38% currently, according to the CME Group.

Wage growth rose in April to 4.4% y/y, up from 4.3% in March and above the 4.2% consensus. This will pose another headache for the Fed, which needs wage growth to ease in its fight to bring inflation back down to the 2% target.

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USD/CHF Technical

• USD/CHF has pushed past resistance at 0.8872 and 0.8924 today. The next resistance line is 0.8996
• 0.8800 and 0.8748 are providing support

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