USD/CHF holds above 0.8050 as Fed Governor Cook refuses to resign

• USD/CHF trims intraday losses as Fed Governor Lisa Cook defied President Donald Trump.

• Fed Governor Cook said she would not step down and will continue fulfilling her duties.

• Stronger Swiss employment data and easing inflation fuel expectations of additional SNB rate cuts.

USD/CHF extends its gains for the second successive session, trading around 0.8060 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) recovers its recent losses after US Federal Reserve (Fed) Governor Lisa Cook refused to resign after US President Donald Trump announced to remove her from the position on the Fed's board of directors. Cook said that she will not exit and will continue to carry out duties.

The upside of the USD/CHF pair could be limited as the Swiss Franc (CHF) may gain ground amid increased safe-haven demand, driven by rising concerns over Fed independence. Moreover, the US Dollar may face challenges as market participants expect that the dismissal of the Fed Governor Cook may increase the chances of earlier interest rate cuts, given Trump’s ongoing pressure on the central bank to reduce borrowing costs.

Additionally, Fed Chair Jerome Powell said at the Jackson Hole symposium last week that risks to the job market were rising, but also noted inflation remained a threat and that a decision wasn't set in stone. Traders will likely await the upcoming release of the Q2 US Gross Domestic Product Annualized and July Personal Consumption Expenditures Price Index data, the Fed's preferred inflation gauge.

Swiss Employment Level rose 0.6% year-on-year to 5.532 million in the second quarter, matching the pace of the previous period, along with inflation remaining below the Swiss National Bank’s (SNB) 2% target, bolstering expectations for further rate cuts, potentially back into negative territory.

Additionally, the newly imposed 39% US tariff on Swiss imports is set to weigh heavily on Switzerland’s export-driven economy and could increase pressure on the Swiss National Bank (SNB) to further ease policy. However, the Swiss government announced last week that it will intensify efforts to enhance the country’s appeal as a business hub, including measures like easing regulatory burdens and delaying costly new rules.