• USD/CHF rises as the US Dollar struggles after Fed Governor Waller signals a potential rate pause.
• Market probability for a September Fed rate hike fell to 50.2% following the remarks.
• Brown Brothers Harriman notes Swiss CPI rose to 0.8% YoY, beating the SNB’s 0.6% forecast and signaling firming inflation.

USD/CHF gains ground after registering losses in the previous day, trading around 0.8080 during Asian hours on Friday. The pair appreciates as the US Dollar (USD) holds gains after recovering daily losses; however, the upside of the Greenback could be limited due to easing hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. Swiss Unemployment Rate would be eyed later in the day.

Federal Reserve (Fed) Governor Christopher Waller indicated a preference for keeping interest rates unchanged at the upcoming September meeting, provided upcoming inflation data contains no major surprises.

Fed Waller’s dovish tone stood in sharp contrast to the hawkish stance delivered by Chairman Kevin Warsh just a week earlier. In response to these remarks, market expectations shifted significantly, with the CME FedWatch tool indicating that the probability of a September rate hike dropped to 50.2%, down sharply from 63.2% the previous day.

Investors and market participants are now shifting their focus toward the release of the US August employment report for further clues on monetary policy trajectory. Current market consensus projects Nonfarm Payrolls to increase by 56,000 jobs, while the Unemployment Rate is forecasted to remain steady at 4.1%.

Franc could find support as Swiss inflation tops SNB forecast

Analysts at Brown Brothers Harriman highlight that the latest Swiss data delivered a clear upside surprise, with headline CPI rising to “0.8% y/y (consensus: 0.5% y/y) vs. 0.4% in July.” They note this is “the highest since September 2024” and, importantly, it stands “above the SNB’s Q3 forecast of 0.6% y/y,” reinforcing the perception that underlying price pressures are firming. BBH adds that core inflation also moved higher, with “core CPI inflation also surprised to the upside at 0.4% y/y (consensus: 0.3%), following four straight 0.3% readings,” underscoring a gradual but broad-based pickup in Swiss inflation.