USD/CHF is extending its gains for the fourth consecutive session, currently trading around 0.8510 during Thursday's European hours. This upward movement can be linked to recent robust US labor statistics, which have reduced the chances of the Federal Reserve implementing another significant rate cut in November.
The ADP US Employment Change report showed an increase of 143,000 jobs in September, surpassing the expected 120,000. Additionally, annual wage growth rose by 4.7% year-over-year. The job additions for August were also revised upward from 99,000 to 103,000, suggesting that the labor market is performing better than initially thought at the start of Q3.
According to the CME FedWatch Tool, the market is currently pricing in a 65.9% chance of a 25 basis point rate cut from the Federal Reserve in November, while the probability of a 50 basis point cut has dropped to 31.4%, down from 49.3% a week prior.
The Swiss Franc (CHF) may be experiencing downward pressure due to disappointing inflation figures released today. Switzerland's Consumer Price Index increased by 0.8% year-over-year in September, which was below market expectations and down from August's 1.1%. This marks the lowest inflation rate since September 2021. Moreover, the monthly inflation rate fell by 0.3%, which was worse than the anticipated 0.1% decline, following a flat performance in August.
However, the Swiss Franc's decline could be limited by safe-haven demand amid rising tensions in the Middle East. Reports from the Israeli Broadcasting Authority (IBA) indicate that Israel's security cabinet has decided to take decisive action following a recent Iranian attack, which involved over 200 ballistic missiles and drone strikes targeting Israel.
