According to the latest report from the State Secretariat for Economic Affairs (SECO), the Swiss labour market continued to improve in March and this in spite of still overvalued Swiss franc. The unemployment rate beat median forecast of 3.0% as it printed at 2.9% (3.2% in February. When adjusted for seasonal factors the gauge stood at 2.9%, unchanged from the previous month and in-line with expectations.
In the FX market, the news went mostly unnoticed as market participants focus on the trade tariff argument between the US and China. After Friday’s sharp moves, the volatility was relatively low on Monday morning. Traders are still trying to interpret the last US job report. Indeed, nonfarm payrolls came in well below estimates, printing at 103k versus 185k median forecast, while the previous month's reading was upwardly revised to 326k from 313k. The unemployment rate stood at 4.1%, while economists were looking for 4.0%.
Since mid-March, the US 2-Year Treasury yield has been trading between 2.25% and 2.35%. However, over the same period, inflation expectations have decreased significantly, falling from 2% to 1.78%, as investors desperately wait for a significant increase in wage pressure. Despite the sustained positive developments in the job market, the lack of reaction on the wage side suggests that there is room for further improvement.
After testing 0.9649 last Friday, USD/CHF stabilised around 0.9595 this morning. Despite failing at breaking the key 0.9630-60 resistance area, the pair is still trading within its monthly uptrend channel. We believe that the greenback has just only gone back to take a better jump forward against the Swissie. On the upside, the following resistance lies at 0.9766 (Fibo 50% on December-February debasement). On the downside, a support can be found at 0.9420-35 (previous low and 50dma).
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