02.08.2025 14:14

The US dollar experienced a significant downturn against the Swiss franc (USD/CHF) on Friday, plummeting nearly 1% from its highest point since June 23rd. This sharp decline mirrored a broader sell-off of the US dollar, driven primarily by disappointing US employment data.

The unexpectedly weak July Nonfarm Payrolls (NFP) report revealed a mere 73,000 jobs added, significantly below the anticipated 110,000. This figure, the weakest of the year, further underscored the weakening US economy when considering the downward revision of June's jobs report to 14,000 from the initially reported 147,000. Consequently, the Swiss franc strengthened against the weakening US dollar.

This underwhelming jobs report drastically increased market expectations for a Federal Reserve interest rate cut in September. The probability of such a cut jumped from 37% before the NFP release to a remarkable 82.1% afterward. This surge in rate cut anticipation fueled the sell-off, pushing the USD/CHF pair to trade near 0.8045 during American trading hours.

Adding to the negative sentiment, the US Dollar Index (DXY), which measures the dollar against a basket of major currencies, experienced a substantial drop from a two-month high of 100.26 to 99.30. While the unemployment rate rose slightly to 4.2%, aligning with projections, and wage growth remained stable (0.3% month-over-month and 3.9% year-over-year), the weak jobs numbers overshadowed these positive indicators. Further compounding the concerns, the ISM Manufacturing PMI unexpectedly fell to 48.0, indicating a continuing contraction in the manufacturing sector and suggesting broader economic weakness. Although the S&P Global Manufacturing PMI showed a slight improvement, it couldn't offset the overall negative impact of the NFP data. The overall picture painted by the economic indicators pointed to significant underlying weakness within the US economy.