The greenback plunged against the Swiss franc on Friday after releasing lower-than-anticipated US employment data for July. The Swiss consumer price index data was in line with analysts’ estimates. Overall, the USD/CHF pair fell from a high of 0.8731 to a low of 0.8537.
According to the data published by the Swiss Federal Statistical Office, the country’s consumer price index inched down by 0.20% m-o-m in July to 107.50 points after remaining unchanged in the previous month. The reported figure, reflecting the first decline in eight months, aligned with analysts’ estimates.
The consumer price index of domestic products inched up 0.20% m-o-m in July, while the consumer price index of imported products fell by 1.30%.
On a y-o-y basis, Swiss inflation rose by 1.30% in July 2024. The prices of clothing and footwear fell by 1.80% y-o-y in July. Likewise, household goods and services prices decreased by 1.50% in the same period. Healthcare prices inched down 0.60% y-o-y in July.
On the contrary, transportation costs inched up 0.20% y-o-y in July. Similarly, recreation and culture costs grew by 1.80%. Notably, inflation for housing and energy stood at 3.80% in July, unchanged from the previous month. Also, inflation for restaurants and hotels remained unchanged at 1.9%.
Excluding volatile items such as food, energy, and fuel, the Swiss core consumer index fell by 0.30% m-o-m in July to 105.10. On a y-o-y basis, Swiss core inflation grew by 1.10% in July 2024, following a similar increase in the previous month.
The Swiss procure.ch and Credit Suisse Manufacturing PMI inched down to 43.50 in July from 43.90 in June, missing forecasts of 43.80. A reading below 50 indicates contraction, and vice versa. The reported figure reflects the 19th successive month of contraction and the steepest fall since April.
The decline was led by production, with the corresponding index decreasing by 1.30 points in July to 43. The index reflecting the order book fell by 2.60 points to 40.50. Likewise, the purchasing volume and purchasing prices index dipped by 1 and 0.60 points to 39.60 and 49.30 points, respectively.
The employment index inched down 0.10 points in July to 45.90. On the contrary, the delivery time index fell by 0.60 points in July to 47.30.
According to the US Bureau of Labor Statistics, the country’s non-farm (private sector) payroll employment increased by 114,000 in July following an addition of 179,000 jobs (downwardly revised from 206,000) in the previous month, but missed forecasts of 176,000. The reported figure is lower than the 12-month average of 215,000.
Health care added 55,000 jobs in July. Likewise, the US construction sector recorded an addition of 25,000 jobs in the same period. Also, transportation and warehousing added 14,000 jobs. Furthermore, the average hourly earnings for all employees on private nonfarm payrolls rose by $0.08 (or 2%) to $35.07 in July.
The US unemployment rate grew to 4.30% in July from 4.10% in June. Economists did not anticipate any change in the jobless rate. Overall, the number of unemployed people rose by 352,000 to 7.20 million. In July 2023, the US unemployment rate was 3.50% and the number of unemployed individuals was 5.90 million.
The labor force participation rate was 62.70% in July, unchanged from the previous month. Likewise, the employment-to-population ratio stood almost unchanged at 60%. Part-time employment grew by 346,000 to 4.60 million in July.
The weak US economic data is expected to keep the USD/CHF pair slightly bearish in the short term.
The historical price chart indicates that the USD/CHF pair is declining after facing resistance at 0.8820. The next level of support is anticipated to be only near 0.8160. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the USD/CHF pair to remain in a downtrend for the next few trading sessions.
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