The US dollar (USD) held steady against the Swiss franc (CHF) on Wednesday, trading near 0.8100 after retreating from a three-month high of 0.8124 earlier in the session. The greenback found initial support from strong US economic data, though gains were tempered by lingering concerns over the prolonged US government shutdown.
US data reinforces dollar resilience but policy outlook uncertain
Fresh figures from the United States showed continued strength in the labor market and services sector. According to Automatic Data Processing (ADP), private-sector employment increased by 42,000 in October, surpassing expectations for a 25,000 rise. Similarly, the Institute for Supply Management (ISM) Services PMI jumped to 52.4 in October from 50.0 in September, signaling a faster pace of expansion in the services industry.
While these data points underscore economic resilience, they have not provided clear guidance on the Federal Reserve’s (Fed) next policy step. Fed Chair Jerome Powell recently commented that another rate cut in December is “not a foregone conclusion,” emphasizing a cautious, data-dependent stance as official releases remain delayed due to the shutdown.
According to the CME FedWatch Tool, markets now assign a 68% probability of a rate cut in December, sharply lower than 94% before Powell’s remarks.
Shutdown stalemate limits dollar upside
The US dollar’s advance has been capped by the ongoing government funding deadlock, now entering its sixth week. With the Senate rejecting a temporary funding proposal for the fourteenth time, the standoff is on track to become the longest shutdown in US history. The disruption has delayed several key economic reports and fueled worries over its potential drag on fourth-quarter growth.
Safe-haven demand supports Swiss franc
Meanwhile, the Swiss franc continues to attract buyers amid heightened global risk aversion. Renewed concerns over lofty technology valuations and warnings from major Wall Street bank executives about potential equity pullbacks have bolstered demand for traditional safe havens, including the CHF.
Focus turns to Swiss labor data
Market participants now await Thursday’s Swiss unemployment figures, which may provide fresh insights into the strength of Switzerland’s labor market and the broader economic outlook.
