Forex News
- USD/CHF falls as disappointing US Nonfarm Payrolls weigh on the US Dollar.
- Fed rate-hike expectations fall following the jobs report, shifting attention to next week’s US CPI data.
- Carry-trade demand and the SNB’s zero-rate policy keep the Swiss Franc under pressure.
USD/CHF edges lower on Friday, erasing most of the previous day’s gains as the US Dollar (USD) weakens following a downside surprise in the US Nonfarm Payrolls (NFP) report. At the time of writing, the pair trades around 0.8080, down 0.53% on the day.
The US economy lost 23K jobs in July, even though economists had expected an increase of 80K. June’s employment gain was also revised down to 20K from the previously reported 57K. However, the Unemployment Rate fell to 4.1% from 4.2%.
The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades around 99.60, down nearly 0.33% on the day, after touching an intraday low of 99.41.
Commenting on the report, Richmond Fed President Thomas Barkin said the jobs data were “more low hire, low fire” and “very consistent with a sector in weak balance.” He also stressed that the Fed “will get inflation to 2%.”
Following the data, the probability of a Federal Reserve (Fed) rate hike at the September meeting fell to around 42% from 54% immediately before the release, according to the CME FedWatch Tool. A cooler inflation reading may be needed to push rate-hike expectations further lower, so traders now look to next week’s US Consumer Price Index (CPI) report.
Despite Friday’s gains against the US Dollar, the broader outlook for the Swiss Franc remains weak. Analysts at OCBC highlight that the Swiss Franc (CHF) "remains under pressure as carry trade funding demand grows and the SNB appears comfortable with a weaker currency." They note that "carry trade funding pressures continue to weigh on the CHF, while recent JPY intervention may have further cemented the CHF’s role as the market's preferred funding currency."
With "inflation subdued and policy rates likely anchored at zero," OCBC expects that "CHF weakness could persist into year-end," adding that, as a consequence of these dynamics, "the CHF is the worst-performing G10 currency against the USD so far in 3Q26."
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
National Bank of Canada (NBC) economists Matthieu Arseneau and Alexandra Ducharme highlight robust Canadian labour data for July, with 75.1K jobs added, a lower unemployment rate and stronger private-sector hiring. They point to solid economic momentum and easing wage pressures, but argue that persistent excess labour supply and temporary employment supports mean the Bank of Canada (BoC) should not rush to raise interest rates.
Solid jobs but policy caution
"July’s LFS data point to continued strength in the Canadian economy at the start of the third quarter. Following GDP growth of around 3.0% in Q2 (official data to be published on August 28th), which supported a recovery in the labour market over the quarter, employment gains strengthened further in the first month of Q3, with a spectacular increase of 75K jobs and a 0.6% rise in hours worked."
"Once again, the private sector is leading the way with a gain of 58K. Over the past three months, businesses have increased their workforce by 146K, a three year high. This strong performance was made possible by a recovery across most sectors."
"Overall, July’s jobs data confirm that the labour market is not as concerning as it was earlier this year, when the unemployment rate was rising and hovering around 7.0%. That said, it is important to remember that the labour market has been in a state of excess supply for quite some time (unemployment mostly in the 6.5% 7.0% range), which is reflected in wage pressures, which remain contained."
"Our assessment of the labour market has led us to conclude in recent months that the risks of second-round effects on inflation (via wages) resulting from rising energy prices are more limited in Canada than in some other advanced economies. We continue to believe that this is the case."
"Given this context, we do not believe the central bank should rush to raise interest rates. First, the labour market remained artificially buoyed by temporary factors, namely the census and a tourism boom in the wake of the FIFA World Cup."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
TD Securities strategists Ryan McKay and Bart Melek highlight that strong discretionary and Asian buying is supporting Gold, even as CTA (Commodity Trading Advisors) positioning has plateaued. They argue CTAs would likely add length only on a move toward $4,600/oz, while softer United States (US) jobs data, subdued energy prices and expectations that Chair Warsh stays on hold could reinforce a stagflation narrative that benefits Gold.
CTA thresholds and macro tailwinds
"Precious metals holding on to gains. Flows have proven strong enough to maintain the upside in gold, but the bar remains high to see additional length from CTAs. Prices would need to make another material leg higher to the $4,600/oz region before CTAs buy more."
"This suggests macro discretionary and Asian appetite will need to continue their buying trends to keep the rally alive. Thus far, Asian appetite remains strong for the yellow metal with broad-based buying across cohorts on SHFE, and continued ETF inflows."
"Meanwhile, the much weaker-than-expected jobs report should see Fed pricing pressures ease, especially with energy prices remaining subdued alongside. These are the first signs of a material shift in the tides for precious metals, with discretionary appetite leading the recovery."
"Higher energy prices could still be a major hurdle, with US inflation data next week in focus. But if the market becomes convinced Chair Warsh won't hike anytime soon, any upside in energy prices could strengthen the stagflation narrative, adding further fuel to the gold bulls."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD falls 0.53% to 1.3940 after a much weaker-than-expected US employment report.
- US payrolls turn negative in July, while sharp downward revisions to previous months deepen concerns over the labor market.
- The Canadian Dollar is supported by stronger-than-expected employment data and a lower unemployment rate.
USD/CAD declines sharply on Friday, trading around 1.3940 at the time of writing, down 0.53% on the day, hitting its lowest level since June. The pair remains under pressure after the release of a much weaker-than-expected US employment report, while Canadian data provides additional support to the Canadian Dollar (CAD).
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) fell by 23K in July, compared with market expectations for an increase of 80K. Revisions were also particularly significant, with Juen and May payrolls revised down by a combined 103K jobs. Despite this sharp deterioration, the Unemployment Rate edged down to 4.1% from 4.2%, while annual Average Hourly Earnings growth slowed to 3.2%, adding to evidence that the US labor market is gradually cooling.
Following the release, the US Dollar (USD) weakened sharply as investors scaled back expectations for monetary tightening by the Federal Reserve (Fed). According to the CME FedWatch Tool, the chance of a 25-basis-point rate hike at the September meeting fell to 42%, down from 55% a day earlier. Markets, however, continue to price in a high chance of at least one rate hike before the end of the year.
Comments from Fed Richmond President Thomas Barkin failed to support the Greenback. Barkin said the latest employment figures point more to a labor market characterized by low hiring and low firing than to an outright deterioration. He nevertheless noted that corporate earnings remain strong and that he is monitoring whether they eventually feed through to the labor market.
The Canadian Dollar also draws support from upbeat domestic data. Statistics Canada reported that the Unemployment Rate fell to 6.4% in July, below market expectations. Employment increased by 75.1K jobs, comfortably beating forecasts of 15K, while the Labor Force Participation Rate rose to 65.1%. These figures strengthen the Canadian currency and add further downside pressure on USD/CAD.
Other Canadian data released on Friday was more mixed. The Ivey Purchasing Managers Index (PMI) eased to 55.1 in July from 56.2 in June, missing market expectations of 55.5. Despite the softer-than-expected reading, the indicator remains comfortably above the 50 threshold, signaling continued expansion in business activity. However, the weaker PMI had little impact on the Canadian Dollar, as markets remained primarily focused on the stronger-than-expected employment report, which continued to underpin the Loonie.
USD/CAD slips below support as market awaits US CPI test for Fed pricing
According to TD Securities, the latest payrolls releases triggered a notable move in FX markets, with "payrolls data broke USD/CAD below 1.40," as contrasting US and Canadian outcomes drove a sharp reaction. The firm argues that the move has underscored that "the sharp USD/CAD reaction to the contrasting payroll outcomes suggests the market remains focused on both central-bank divergence and Canada's domestic outlook."
On the Canadian side, TD notes that "recent developments in the Canadian economy have evolved broadly in line with our forecasts," and that the data surprise was sufficient to "briefly pushing USD/CAD below the 1.40 support level." However, the team cautions that "we think the bearish USD momentum may not sustain unless US CPI also surprises lower to allow market to price out near-term Fed rate hiking odds." In their view, "sustained USD weakness will likely require softer US CPI," with "next week's US CPI report" flagged as "the next major test for near-term Fed rate hike pricing."
USD/CAD technical analysis
In the four-hour chart, USD/CAD trades at 1.3943, extending its retreat below the 100-period simple moving average (SMA) at 1.4057 and the 200-period SMA at 1.4119, which keeps the near-term bias bearish. The downward resistance trend line, now projected from the 1.4241 area with a break reference near 1.4072, reinforces the overhead supply together with the horizontal barrier at 1.4000, while the Relative Strength Index (RSI) slipping to 28 suggests the pair is entering oversold territory but not yet showing a clear reversal signal.
On the topside, initial resistance is seen at the 1.4000 horizontal line, followed by the 100-period SMA at 1.4057 and the descending trend-line reference near 1.4072, with the 200-period SMA at 1.4119 acting as a broader cap if a rebound extends. On the downside, the immediate focus sits on the horizontal support at 1.3900, where a decisive break would open the way for further losses, while holding above this floor would allow for a corrective bounce within the prevailing bearish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- DXY slides after Nonfarm Payrolls unexpectedly show 23K job losses.
- Treasury yields fall as September hike odds sink sharply.
- Focus shifts to CPI and PPI for inflation confirmation.
The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is down 0.36% to 99.58 following a weaker-than-expected US jobs report. The DXY hit 99.41 after the jobs report release, its lowest level since June 15. The data has also eased pressures on the Federal Reserve (Fed) to hike rates, as inflation remains stubbornly above the Fed’s 2% goal.
DXY falls after July payrolls contracted, pushing yields lower and shifting attention to next week’s CPI
July Nonfarm Payrolls showed that the economy slashed 23K jobs from the workforce, below forecasts of an 80K jobs expansion. The figures for May and June were revised lower, with the former at 63K, down from 129K, and the latter at 20K, down from 57K. Although the report was negative, the Unemployment Rate ticked lower from 4.2% to 4.1%.
On the data, Richmond Fed Thomas Barkin said that the labor market is more low-hire, low-fire, and noted that corporate earnings “are quite strong.”
Following the data, US Treasury yields, particularly the 10-year T-note yield, fell by 3.5 basis points to 4.637%.
Fed expected to hold rates in September
Money markets trimmed expectations for a rate hike in September. The odds of a hold reversed from around 42% to nearly 70%, while the chances of a 25-basis-point increase eased from 58% to 30%, according to Prime Terminal data.
Traders' focus shifts towards the release of the US Consumer Price Index (CPI) for July next week, on Wednesday. Economists project inflation to drop from 3.5% to 3.4% YoY, and Core CPI to tick lower from 2.6% to 2.5% YoY.
A day after CPI, the Producer Price Index (PPI) is released, which is used to calculate the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.
Next week's US economic calendar
US Dollar Index Price Forecast: Technical outlook
In the daily chart, Dollar Index Spot trades at 99.63, retaining a bearish near-term bias as it slips below the clustered simple moving averages (SMA) pack, whose latest composite reading sits near 100.57 and now acts as overhead resistance. Price is testing the rising support trend line around 99.63, highlighting a pivotal area where a daily close lower would reinforce the downside case, while the Relative Strength Index (14) at 36.19 hovers just above oversold territory, suggesting that selling pressure is still dominant but could be nearing fatigue.
On the topside, a recovery above the SMA cluster at 100.57 would be the first signal that the downside is easing, with the descending resistance trend line break level at 101.57 acting as the next barrier and capping any stronger rebound for now. On the downside, a sustained move below the rising support trend line at 99.63 would open the door for a deeper slide, while the RSI’s position near 36.19 hints that additional losses could become progressively harder to extend even as the broader technical structure remains under pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Commerzbank’s Carsten Fritsch sees continued volatility in Brent as Strait of Hormuz negotiations remain unresolved and inventories tighten. Fritsch expects energy agency reports to support prices near term but project a significant decline once an agreement emerges, cutting their year-end Brent forecast to USD 75 per barrel from USD 80 previously.
Hormuz talks and low inventories
"Ultimately, everything remains up in the air and we think that it will still take some time until a final agreement is found. In our view, price fluctuations on the oil market are therefore likely to continue for a while. Once an agreement emerges towards the end of the year, however, the oil price is likely to fall significantly, as it did in the case of the recent hopes of an agreement."
"We have therefore revised down our price forecast for a barrel of Brent oil at year-end to USD 75 (previously: USD 80)."
"Next week, the three energy agencies will also take a look at developments on the physical oil market in their monthly reports, which should rather support prices."
"The shortfall is largest in US inventories of middle distillates: They are almost 12% below the usual level and are at their lowest for this time of year in 30 years."
"Nevertheless, any disruption is critical in an already tight market."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING’s Chief International Economist James Knightley notes that the weak July US jobs report has pushed market pricing away from a September Federal Reserve rate hike, with the Dollar softening and 2-year yields falling. He highlights that upcoming data – another jobs report, two CPI releases and the Jackson Hole Symposium – will be crucial for the Fed’s decision, but ING still expects an extended pause.
Markets scale back Fed hike odds
"The US jobs report for July was surprisingly weak, with payrolls falling 23k while there were 103K of downward revisions to the past two months' data, leaving the 3M average at 20,000. The unemployment rate fell to 4.1% from 4.2%, but not for good reasons. It was primarily because of a further drop in the participation rate – unemployed people leaving the workforce entirely. Average hourly earnings growth slowed to just 3.2% year-on-year from 3.5%."
"Reaction has been significant, with 2Y yields down 8bp and the dollar softening, while Fed funds futures contracts are now only pricing 10bp of a potential 25bp hike on 16 September. Today’s outcome supports our call for a prolonged pause from the Federal Reserve, but remember that ahead of the September FOMC meeting we have a further jobs report, two inflation prints and the Federal Reserve’s Jackson Hole Symposium"
"In terms of jobs, we would tentatively suggest a rebound is possible for August, but the Fed’s decision is more likely to come down to what happens on inflation. We expect next week’s July CPI to show headline prices rising 0.1% month-on-month and core prices rising 0.2%."
"Given we are expecting encouraging news on disinflation, we are consequently expecting the Fed to remain on hold well into 2027."
"Assuming we get a deal to reopen the Strait of Hormuz, that can feed through into lower gasoline prices and keep the disinflation trend in place through to year-end and beyond."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Thomas Barkin, President of the Federal Reserve (Fed) Bank of Richmond, participated in an online event hosted by the National Association for Business Economics on Friday. He said that the latest employment figures point to a labor market in weak balance rather than one in decline, describing the picture as low hiring alongside low firing. He added that corporate earnings remain strong and that he is watching them for signs of how they feed through to jobs.
Key takeaways:
Jobs data was very consistent with a sector in weak balance.
Jobs data is more low hire, low fire.
The jobs data doesn't feel very good, but it's where it is.
Corporate earnings are quite strong and growing nicely.
We're watching corporate earnings for linkages to the job market.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.30% | -0.31% | -0.47% | -0.57% | -0.49% | -0.38% | -0.59% | |
| EUR | 0.30% | -0.02% | -0.13% | -0.24% | -0.20% | -0.09% | -0.28% | |
| GBP | 0.31% | 0.02% | -0.11% | -0.25% | -0.18% | -0.07% | -0.28% | |
| JPY | 0.47% | 0.13% | 0.11% | -0.11% | -0.04% | 0.06% | -0.16% | |
| CAD | 0.57% | 0.24% | 0.25% | 0.11% | 0.06% | 0.19% | -0.04% | |
| AUD | 0.49% | 0.20% | 0.18% | 0.04% | -0.06% | 0.12% | -0.10% | |
| NZD | 0.38% | 0.09% | 0.07% | -0.06% | -0.19% | -0.12% | -0.21% | |
| CHF | 0.59% | 0.28% | 0.28% | 0.16% | 0.04% | 0.10% | 0.21% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
ING Commodities Strategist Ewa Manthey highlights that Copper has surged back near record highs as traders accelerate shipments into the US ahead of potential import tariffs, tightening physical markets and draining LME inventories. She notes constrained mine supply, low treatment charges and strong electrification-related demand, but warns that any policy disappointment or narrower-than-expected tariffs could trigger a correction and partially unwind recent gains.
Tariff expectations and market tightness
"Copper is trading above $14,000/t, close to its record high. At the same time, LME inventories have fallen further, and the cash-to-three-month spread has moved deeper into backwardation, highlighting increasingly tight physical market conditions."
"Copper shipments into the US have accelerated ahead of a potential tariff decision, pushing COMEX inventories to a record high. US copper imports exceeded 200,000 tonnes in July alone – the highest monthly level in at least 12 years."
"At the same time, the London copper market is showing increasing signs of tightness. LME inventories have fallen to a five-month low, while the cash-to-three-month spread has widened to around $120/t backwardation– up from about $40 a week ago and the widest since October, pointing to a squeeze on short-term supplies."
"Mine supply growth remains constrained, while low treatment charges continue to point to tight concentrate availability. Demand linked to electrification, power grid investment and AI infrastructure also remains supportive. We continue to expect the global refined copper market to record a deficit of around 35k tonnes in 2026."
"Much of the recent rally reflects expectations that tariffs will be implemented broadly as expected. But if the final measures are delayed, narrower than expected or exempt refined copper, part of the recent rally could unwind. Stockpiling into the US would slow, inventory flows would begin to normalise, and some of the current tightness outside the US would ease. Any correction could be amplified if investors unwind positions built on tariff expectations."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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