USD/CHF hits multi-week lows at 0.7950 amid higher hopes of Fed easing

• The US Dollar extends losses to 0.7950, weighed by hopes of a more aggressive Fed easing cycle.
• Weak US Labour data has raised speculation of a 50 bps Fed cut next week.
• SNB President Schlegel has cooled expectations of negative interest rates.
  

The US Dollar trades lower for the second consecutive day against the Swiss Franc on Monday. The soft Payrolls report seen on Friday keeps weighing on the US Dollar, as investors ramp up their bets for Federal Reserve rate cuts in the coming months.

US Nonfarm Payrolls data confirmed a sharp slowdown in job creation in August, with only 22K new payrolls, below market expectations of a 75K reading. Beyond that, while June's reading was released to -13K, posting the first net loss in employment since the height of the pandemic in 2020.

These figures practically confirm a Fed rate cut next week and have raised speculation about a 50 bps cut. The CME Fed watch tool shows a 19% chance of a jumbo cut after the September 16 and 17 meeting, a possibility that was discarded before the NFP release.

In Switzerland, the SNB president, Martin Schlegel, calmed hopes of negative interest rates, stating that he has a high bar on further rate cuts, due to the undesirable side effects of negative interest rates for savers and pension funds. These comments have provided additional support to the Swissie.