USD/CHF remains depressed below 0.7675 ahead of US Retail Sales data
- USD/CHF remains pinned to 0.7650 lows after falling 1.6% in the previous two trading days.
- Renewed concerns about the US labour market are hammering the US Dollar.
- On Tuesday, all eyes are on the US Retail Sales report.
The US Dollar (USD) is trading sideways, within a narrow range around 0.7650 against the Swiss Franc (CHF) on Tuesday, consolidating losses after selling off 1.6% over the two previous trading days, as investors shift their focus to the US Retail Sales Report due later on the day.
US data released last week increased concerns about the labour market. Job creation slumped in January, according to the ADP Employment Change report, and JOLTS data revealed that job openings fell to their lowest levels in nine years.
US employment is not likely to take off any time soon
Beyond that, the White House Economic Adviser, Kevin Hassett, affirmed on Monday that job growth will remain low in the coming months, due to a slower labour force and higher productivity. These comments dampen expectations for Wednesday’s Nonfarm Payrolls report and endorse market hopes that the Fed will have to lower rates further than the quarter-point projected for 2026.
The Swiss SECO Consumer Climate Index released on Monday showed a moderate improvement to -30 in the three months to January, up from -37 in December. The survey shows a deteriorating confidence in the economic outlook, although the sentiment about the financial situation and the willingness to make big purchases have improved.
The highlight on Tuesday is the mentioned US Retail Sales report, which, together with Wednesday’s NFP report, and Friday’s US Consumer Prices Index (CPI), might help to assess the pace of the timing of the Federal Reserve’s easing calendar. In Switzerland, the main attraction will be January's CPI release, also due next Friday.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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