USD/CHF treads water above 0.8050 as US tariffs weigh on Swiss Franc

• USD/CHF may strengthen as the Swiss Franc faces pressure from newly imposed 39% US tariffs on imports from Switzerland.
• The SNB may still push rates further into negative territory, with Swiss annual inflation ticking up to 0.2% in July.
• Soft US labor market data has boosted the odds of a Fed rate cut in September.

USD/CHF remains steady for the second consecutive day, hovering around 0.8060 during the Asian trading hours on Friday. However, the pair may appreciate as the Swiss Franc (CHF) could receive downwards pressure due to newly enacted 39% tariffs on United States (US) imports from Switzerland.

However, Swiss President Karin Keller-Sutter and Economics Minister Guy Parmelin traveled to Washington to present a revised proposal, but failed to reach a deal. The sweeping tariff is set to affect Swiss exports to its biggest market US.

The Swiss National Bank (SNB) may still cut interest rates deeper into negative territory, as Swiss annual inflation edged up to 0.2% in July, above the 0.1% forecast but still near zero. Subdued price growth, along with mounting external risks, underpins this view.

The USD/CHF pair may face challenges as traders are pricing in nearly a 93% possibility of a 25 basis point (bps) cut in September, up from 48% a week ago, according to the CME FedWatch tool.

The expectations for Fed rate cut next month, with another possible move in December, are boosted as new applications for unemployment insurance in the United States (US) increased, following the July US Nonfarm Payrolls (NFP) report pointed to a cooling labor market.

US Initial Jobless Claims increased to 226K for the week ending August 2. This figure came in above the market consensus of 221K and was higher than the previous week's 218K.