USD/CHF Hits 2-Month High, Strong NFP Lifts Dollar and Yields
The Swiss franc weakened on Friday (June 5th) after the US dollar strengthened following much stronger-than-expected US jobs data. USD/CHF rose to around 0.7955, nearing a two-month high, as markets reaffirmed the scenario of US interest rates remaining high for longer.
The Nonfarm Payrolls report showed an increase of 172,000 jobs in May, more than double market expectations. April's data was also revised upward to 179,000 from 115,000, while the unemployment rate remained at 4.3%. This combination reinforces the narrative that the US job market is returning to solidity and gives the Fed room to focus more on inflation.
Inflationary pressures are further complicated by the surge in oil prices related to supply disruptions in the Strait of Hormuz since the US-Iran conflict. Higher energy costs have fueled persistent inflation concerns, leading markets to view the Fed not only as holding interest rates but also as potentially raising them if price pressures intensify.
The derivatives market also adjusted: the probability of a rate hike at the October meeting rose to around 40% from 30% after the NFP release. This repricing pushed the US dollar and Treasury yields higher, with the DXY moving closer to 100.
In Switzerland, recent inflation was lower than expected and remained within the SNB's target range of 0%–2%, so policy support for the CHF was relatively limited compared to the hawkish sentiment from the US side. The combination of "strong US data + energy inflation risks" means USD/CHF is likely to remain supported in the short term. (Arl)
Source: Newsmaker.id
