USD/CHF rebounds amid resilient US labor data and cautious Fed outlook

• The USD/CHF attempts a recovery after falling to its lowest level since July 2011, trading near 0.7970.
• US Jobless Claims fall to 227,000, beating expectations and marking the fourth straight weekly drop.
• The Fed minutes reveal a cautious stance, with most officials favoring interest rate cuts later in the year.

The Swiss Franc (CHF) weakens against the US Dollar (USD) on Thursday, as the Greenback gains ground following stronger-than-expected US weekly jobless claims data, highlighting ongoing strength in the labor market. However, escalating tariff tensions keep broader market sentiment cautious, with upside potential for the US Dollar likely to remain limited in the near term.

The USD/CHF pair is attempting a modest recovery after falling to its lowest level since July 2011 earlier this month amid persistent Franc's strength. At the time of writing, the pair is trading around 0.7970 during the American trading hours, trimming losses from the previous two days as the recent dip attracts some bargain buyers. The bounce aligns with renewed bullish momentum in the Greenback,with the US Dollar Index (DXY) hovering near 97.75.

The latest US Jobless Claims report showed that 227,000 people filed for unemployment benefits last week, well below the 235,000 expected by economists. This marks the fourth straight weekly decline and points to continued strength in the labor market, even as broader economic concerns persist. At the same time, Continuing Claims -- a measure of ongoing unemployment -- edged up to approximately 1.965 million, the highest level since November 2021 , hinting that while layoffs remain subdued, job seekers are taking longer to find new positions.

The US Dollar is also finding support from diminishing expectations of an immediate rate cut, as recent labor market and inflation data suggest the economy remains resilient. Adding to this sentiment, the minutes from the Federal Reserve's (Fed) June 17-18 meeting, released on Wednesday, revealed that while most policymakers anticipate rate cuts later this year, some signaled they could consider easing as soon as the July meeting if economic conditions warrant it. However, the Fed maintained a cautious stance, emphasizing that any policy move would depend on incoming data and evolving risks, including trade-related inflation pressures. This has led markets to scale back expectations for a July rate cut, with the CME FedWatch Tool showing traders assigning only a 6.7% probability of an interest rate cut.

In the latest tariff developments, US President Donald Trump has postponed the implementation of new reciprocal duties to August 1, giving affected countries more time to negotiate revised trade terms. Official letters have already been sent to 21 nations so far including Japan, Brazil, and South Korea, warning of steep tariffs ranging from 25% to 50% if fails to reach a deal before the deadline. Looking ahead, markets will be closely watching for additional letters to countries that have not yet been notified, while progress in trade negotiations such as those involving India, China and the European Union could influence sentiment in the coming days.