USD/CHF gains as hawkish Fed outlook puts pressure on Swiss Franc

An October US Nonfarm Payrolls increase of 165,000, well above expectations, lifted USD/CHF following the release.
The likelihood of a 25-basis-point Fed rate rise exceeds 78%, according to CME FedWatch.
Concerns over technology regulation and US fiscal gridlock following Democratic victories could support the Swiss Franc.

Falling crude oil prices could restrain USD/CHF's advance by easing inflationary pressures and weighing on the Greenback. The pair is nevertheless gaining for a third consecutive day, trading at around 0.8210 in Monday's Asian session. The retreat in energy markets followed comments from US President Donald Trump that further military action against Iran is "highly unlikely," provided progress on Iran's nuclear programme continues and the Strait of Hormuz stays open. Trump also recognised that the unpopular Middle East conflict, which had earlier pushed energy costs higher, was a significant factor in the Republicans' recent midterm election defeats.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Strong labour market figures and growing expectations of tighter monetary policy could help the US Dollar (USD) recover its footing. The CME FedWatch tool now puts the likelihood of a 25-basis-point interest rate rise at the December Federal Open Market Committee (FOMC) meeting at more than 78%, following a sharp increase.

October Nonfarm Payrolls (NFP) rose by 165,000, comfortably exceeding the consensus forecast of 65,000 and following September's revised reading of 60,000. Meanwhile, the Unemployment Rate edged down to 4.1%, below the 4.2% forecast. These firm US employment figures provide substantial support for hawkish expectations for the Fed. For clearer signals on the Federal Reserve's next policy steps, investors and other market participants are now looking to Tuesday's Consumer Price Index (CPI) report and Friday's Producer Price Index (PPI) release.

Greater demand for safe-haven assets could strengthen the Swiss Franc (CHF) and weigh on USD/CHF, after the Democratic sweep fuelled expectations of stricter regulation of the AI buildout. The election outcome could also bring political gridlock, making US fiscal restraint more likely.

USD/CHF faces further downside before recovery risk rises, UOB says

UOB Group strategists remain cautious about the medium-term outlook for USD/CHF, saying their “update from yesterday (05 Nov, spot at 0.8165) remains valid.” Further losses remain possible in their view: “there is a chance for USD to test 0.8110 before the risk of a recovery increases.” UOB identifies 0.8205 as the key upside threshold for an end to the recent downtrend, stressing that “a breach of 0.8205 (no change in ‘strong resistance’) would mean that the USD decline from one week ago has run its course,”

Swiss Franc Lags New Zealand Dollar Today

Today's percentage movements in the Swiss Franc (CHF) against the major currencies listed are set out below. Its weakest performance was against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.16%	-0.21%	-0.17%	-0.16%	-0.37%	-0.89%	-0.03%
EUR	0.16%		-0.05%	0.00%	-0.01%	-0.21%	-0.73%	0.13%
GBP	0.21%	0.05%		0.06%	0.04%	-0.16%	-0.68%	0.18%
JPY	0.17%	0.00%	-0.06%		-0.00%	-0.20%	-0.73%	0.14%
CAD	0.16%	0.00%	-0.04%	0.00%		-0.20%	-0.72%	0.14%
AUD	0.37%	0.21%	0.16%	0.20%	0.20%		-0.52%	0.34%
NZD	0.89%	0.73%	0.68%	0.73%	0.72%	0.52%		0.86%
CHF	0.03%	-0.13%	-0.18%	-0.14%	-0.14%	-0.34%	-0.86%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the Swiss Franc on the left and following its row across to the US Dollar, for instance, gives the percentage change for CHF (base)/USD (quote) in the corresponding cell.