Swiss franc climbs as Swiss inflation flat

The Swiss franc has posted gains on Monday. In the North American session, USD/CHF is trading at 0.8229, down 0.48% on the day.

Swiss inflation falls to zero

Swiss CPI was unchanged y/y in April, after a 0.3% gain in March and missing the market forecast of 0.2%. This was the lowest reading since March 2021 and was driven by lower prices for food, household goods and services and transport. Monthly, CPI was also flat, matching the March reading and below the market estimate of 0.2%.

Is the Swiss franc getting too expensive for the Swiss National Bank. The Swissy has been red-hot, gaining 6.5% in April against the US dollar and 8.8% since the start of the year. The SNB has not hesitated to intervene when it feels that the Swiss currency has become too high, which makes Swiss exports more expensive. If the Swiss franc continues to appreciate, the SNB can be expected to inrtervene and sell Swiss francs.

In the US, the ISM Services Manufacturing improved to 51.6 in April, up from 50.8 a month earlier, which was a nine-month low. This was above the market estimate of 50.6. Business activity expansion remains weak over concerns about tariffs and deep budget cuts to federal agencies.

US nonfarm payrolls higher beats forecast

The US wrapped up the week with US nonfarm payrolls, which dipped slightly to 177 thousand in April, down from a revised 185 thousand in March. This easily beat the market estimate of 130 thousand. The positive employment report points to a resilient labor market despite the US economy declining in the first quarter.

The markets have responded by lowering the odds of a rate hike in June to 33%, down sharply from 60% a week ago, according to the CME's FedWatch. The Federal Reserve meets on Wednesday and is virtually certain to maintain the benchmark rate of 4.25%-4.5%.

• USD/CHF has pushed below support at 0.8264. Below, there is support at 0.8208
• There is resistance at 0.8321 and 0.8377