USD/CHF tumbles to near 0.9030 as US jobless claims soar and SNB turns hawkish

• USD/CHF has fallen like a house of cards as US weekly jobless claims rose to a 19-month high at 261K.
• Easing US labor market conditions might force the Fed to go for a neutral policy.
• SNB Jordan said it would not be a good idea to wait for inflation to rise and then raise interest rates.

The USD/CHF pair has refreshed its weekly low at around 0.9030 after the release of 19-month high United States Initial Jobless Claims in the early New York session. Soaring jobless claims have dragged the US Dollar Index (DXY) sharply lower to near 103.60. The USD Index was auctioning in a range of 103.67-104.36 for the past two trading sessions and it seems that it is coming out of the woods now.

S&P500 futures have turned positive as a significant jump in the weekly initial jobless claims numbers indicates that tight labor market conditions are releasing some heat. Overall market mood has turned upbeat and the appeal for the risk-perceived assets has strongly improved.

As per the report, US weekly jobless claims for the week ending June 02 rose by 28K to 261K while the street was anticipating a figure of 235K, upwardly revised from the prior release of 233K. A major economic indicator that has been keeping the odds of one more interest rate hike from the Federal Reserve (Fed) is the strong labor market and now surprisingly higher jobless claims have increased support for a neutral interest rate policy by the Fed.

The impact of higher jobless claims is not restricted to the USD Index only. US Treasury yields have also come under extreme pressure. The yields offered on 10-year US government bonds have sharply dropped more than one percent to 3.78%.

The strength behind the dive move in the Swiss Franc asset has also come from hawkish commentary by Swiss National Bank (SNB) Chairman Thomas. J Jordan. SNB Jordan said it’s really important to bring Swiss inflation to a level of price stability," He further added it would not be a good idea to wait for inflation to rise and then raise interest rates. Investors should note that the SNB has already raised interest rates to 1.50%.