Swiss Franc remains on the defensive despite stronger Swiss employment figures

• USD/CHF remains steady near weekly highs, at 0.8063, with dips capped above 0.8050.
• Strong Swiss employment data has failed to provide any significant support to the Swissie.
• US PCE inflation figures maintain pressure on the Fed to hike interest rates.

The Swiss Franc (CHF) has failed to find support on the upbeat Swiss employment figures released on Thursday and keeps drifting lower against the US Dollar (USD) on Thursday. The USD/CHF pair has returned to levels a few pips shy of the weekly high at 0.8063 during the early European session, as the mild pullback witnessed on Wednesday’s late trading was reversed during Thursday’s Asian session.

Data released by the Swiss Federal Statistics Office earlier on the day revealed that total employment, excluding agriculture, rose by 2% to 5.968 million in the second quarter, from 5.537 million in the previous three months of the year. Beyond that, job vacancies increased by 2,600, to 98,700 in the three months to June, with 33.9% of the companies reporting difficulties in recruiting qualified workers.

These figures highlight a tighter labour market, which normally tends to push wage inflation higher, as companies need to offer higher salaries to fill their vacancies. The impact of these figures on the Swiss Franc, however, has been muted.

US inflation supports the USD

The US Dollar, on the other hand, remains moderately bid across the board on Tuesday, as the US Personal Consumption Expenditures (PCE) Price Index, released on Wednesday, confirmed that price pressures remain high, adding pressure on the Federal Reserve to hike interest rates in the coming months.

Analysts at Deutsche Bank highlight that, although the "pricing of a September Fed hike was pretty stable (up from 36% to 37%)," the more notable shift was further along the curve, with "42bps of hikes now being priced by next June (+3.7bps on the day)." They note that this adjustment in expectations fed directly into the rates market, leaving "2yr Treasury yields +3.6bps higher at 4.21%."