Swiss Franc weakens against US Dollar after strong ADP and ISM Services PMI data

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USD/CHF extends its advance on Wednesday as ongoing tensions in the Middle East and stronger-than-expected US labor data lift the US Dollar (USD). At the time of writing, the pair is trading around 0.7900, staying on the front foot for a third straight day.

USD/CHF rises for a third straight day as stronger US labor data supports the US Dollar.
Traders await Friday’s US Nonfarm Payrolls report after upbeat ADP and JOLTS data.
SNB’s Schlegel says the central bank stands ready to intervene against excessive Franc strength.

The latest ADP report showed US private payrolls rose by 122K in May from 105K in April, topping market expectations of 117K. It was also the highest level since January 2025.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99.47, near the upper end of its recent range and up 0.25% on the day.

Recent labor data suggests the US job market is regaining momentum after last year’s cooling trend. JOLTS Job Openings data released on Tuesday also surprised to the upside, showing the highest level of job openings since May 2024.

Meanwhile, the final reading of the US S&P Global Services Purchasing Managers Index (PMI) eased to 50.7 in May from 50.9 in April, missing market expectations of 51. However, the ISM Services PMI rose to 54.5 in May from 53.6 in April, beating forecasts of 53.8.

Attention now turns to the US Nonfarm Payrolls (NFP) report due on Friday. Analysts expect the US economy to add 85K jobs in May after a 115K increase in April.

A stronger-than-expected reading could further support hawkish Federal Reserve (Fed) expectations as markets remain concerned about inflation risks linked to higher Oil prices.

On the Swiss side, traders await Switzerland’s Consumer Price Index (CPI) data due on Thursday. Annual inflation is expected to rise to 0.8% in May from 0.6% in April.

SNB Chairman Martin Schlegel said on Thursday that medium-term inflation pressures remain broadly unchanged and reiterated that the central bank stands ready to intervene in FX markets to counter excessive Swiss Franc (CHF) strength. He also warned that the Iran war could increase pressure on the Franc.

On the geopolitical front, traders are closely watching whether Washington and Tehran can reach a deal to end the war after tensions escalated again this week. US President Donald Trump denied reports that talks had stalled and said Iran had agreed not to have a nuclear weapon, Reuters reported on Wednesday.

SNB FAQs

What is the Swiss National Bank?

The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.

How does the Swiss National Bank interest-rate policy affect the Swiss Franc?

The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.

Does the Swiss National Bank intervene in the forex market?

Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.

When does the Swiss National Bank Governing Council decide on monetary policy?

The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.