USD/CHF slips after weak US labor market data

• The pair reached a low of 0.8375 and then bounced back above 0.8400, but has daily losses.
• August US NFPs came in less than expected following this weak trend in labor market data.
• Investors could bet on more tapering in September from the Fed.

On Friday, USD/CHF dropped to a daily low of 0.8375 and then bounced back above 0.8400. However, the upside is limited as the US reported weak labor market numbers.

The appeal of the US dollar diminished after the release of a lower-than-expected NFP report for August, which showed the creation of 142,000 new jobs, falling short of forecasts of 160,000 but exceeding the revised figure of 89,000 from July. The unemployment rate fell in line with expectations, falling from 4.3% to 4.2%. Additionally, average hourly earnings rose 3.8% year-over-year, beating expectations.

Following the data, based on the CME FedWatch tool, the probability of a 0.50% rate cut by the Federal Reserve (Fed) at its September 18 meeting remained steady at around 40%, but what is a done deal is that the easing cycle will start that month with a 25 bps discount. The data received will justify or not a higher discount.

USD/CHF Technical Outlook

The outlook for USD/CHF is neutral to bearish as the Relative Strength Index (RSI) hovers deep in negative territory but with a flat slope, while the Moving Average Convergence Divergence (MACD) shows flat green bars, further supporting the outlook neutral for the pair. Overall, the bias is still bearish as the pair is below the 20,100 and 200-day simple moving averages (SMA).