USD/CHF extends gains as traders weigh mixed US data and Fed outlook

• USD/CHF extends its recovery for the third straight day as traders digest mixed US economic data.
• Fed commentary diverges, as Waller supports a December cut while Barkin remains cautious.
• Markets await the delayed Nonfarm Payrolls data, which is likely to shape expectations for the Fed’s next move.

The Swiss Franc (CHF) weakens against the US Dollar (USD) on Tuesday, with USD/CHF extending gains for the third straight day as traders digest the latest batch of US economic data. At the time of writing, the pair is trading around 0.7997, rebounding from an intraday low of 0.7937, as the Greenback holds firm.

The latest batch of US economic data offered a mixed picture. ADP figures showed private payrolls falling by an average of 2,500 per week in the four weeks to November 1, after an 11.25K decline in the prior period, reinforcing signs of a weakening labor market. Meanwhile, August Factory Orders rose 1.4% MoM, in line with expectations and reversing July’s 1.3% drop, pointing to a mild pickup in manufacturing activity.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.62, recovering from an earlier dip to 99.40.

The labor market remained in focus as traders await the delayed September Nonfarm Payrolls (NFP) report due on Thursday. The US Department of Labor has begun releasing the backlog of missed weekly Jobless Claims data. Initial claims came in at 232K, while continuing claims rose to 1.957 million for the week ending October 18.

Federal Reserve (Fed) commentary added another layer to the narrative. Fed Governor Christopher Waller struck a notably dovish tone, describing the US labor market as “weak” and “near stall-speed.” He suggested that restrictive policy may now be weighing on the economy and said he supports a 25 bps rate cut at the December 9-10 meeting to provide “additional insurance” for the labor market.

In contrast, Fed’s Thomas Barkin offered a more balanced assessment, noting that “it’s hard to declare victory on either mandate” and stressing that inflation, while above target, is unlikely to re-accelerate. Barkin acknowledged that the labor market is softening but argued it may not weaken much further, adding that the jobs market appears “somewhat weaker than the data suggests.”

On the Swiss side, the Swiss National Bank (SNB) continues to face headwinds from a strong Franc, weak domestic inflation and modest economic growth. In comments made earlier this month, SNB Board member Petra Tschudin said the central bank is “in a good position with current interest rates,” noting that inflation forecasts remain within its 0-2% target range. She also noted that the SNB does not see a case for cutting rates below zero for now, although such a move cannot be ruled out if conditions change.