USD/CHF remains tepid near 0.9050 amid dovish sentiment surrounding the Fed

• USD/CHF could depreciate as weaker US labor data initiated the discussion over the Fed adopting a less hawkish stance.
• US Initial Jobless Claims rose to an eight-month high of 231K, surpassing estimates of 210K.
• The yield on a 10-year Swiss bond dropped to a new monthly low, making Swiss assets less attractive.

USD/CHF hovers around 0.9060 with negative sentiment during the European session on Friday following the weak US labor data released on Thursday. This has initiated a discussion of the Federal Reserve (Fed) switching toward a less hawkish stance regarding the monetary policy, undermining the US Treasury yields and weakening the US Dollar (USD).

The US Bureau of Labor Statistics (BLS) released data indicating that the number of individuals filing for unemployment benefits exceeded expectations. Initial Jobless Claims for the week ending May 3 rose to 231,000, surpassing estimates of 210,000 and showing an increase from the previous week's reading of 209,000.

The US Dollar Index (DXY), which gauges the performance of the US Dollar (USD) against six major currencies, hovers around 105.20 with 2-year and 10-year US Treasury yields standing at 4.81% and 4.44%, respectively, by the press time.

On the Swiss front, the banks are closed on Friday due to the Ascension Day holiday. The yield on the 10-year Swiss government bond dropped below the 0.7% threshold, nearing a new monthly low, in line with a global decline in bond yields. The lower yields make Swiss assets less attractive to foreign investors, leading to a decrease in demand for the Swiss Franc.

Earlier this week, the Swiss National Bank’s (SNB) foreign exchange reserves increased to CHF 720 billion in April from CHF 716 billion in the previous month. This marked the fifth consecutive rise since reaching a near seven-year low of CHF 642 billion in November. The SNB has shifted its focus away from intentionally bolstering the Swiss Franc (CHF), as the central bank has advanced its efforts against inflation.

According to the State Secretariat for Economic Affairs on Tuesday, the seasonally adjusted Swiss Unemployment Rate declined to 2.3% month-on-month in April from 2.4% in March. This marks the lowest level in four months.