USD/CHF appears to be on backfoot amid subdued US Dollar ahead of US NFP

• USD/CHF trades cautiously with a focus on the US NFP.
• Easing US labor market strength has prompted Fed rate-cut prospects.
• The expectations of the SNB intervening in currency markets remain firm.

The USD/CHF pair is slightly positive in Friday’s Asian session but trades close to its crucial support of 0.8883. The Swiss Franc asset remains under pressure in past few trading sessions as the US Dollar struggles to gain ground due to growing speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.

Firm expectations for the Fed reducing interest rates in September have improved appeal for risky assets. S&P 500 futures have posted decent gains in the Tokyo session. The US Dollar Index (DXY) stays on the sidelines near 104.00 ahead of the United States Nonfarm Payrolls (NFP) data for May. 10-year US Treasury yields bounce back to 4.30% but are significantly down from the previous week’s high of 4.62%.

Trades have raised bets in favor of the Fed to start lowering its key borrowing rates from their current levels in September due to normalizing labor market strength. This week, weaker-than-expected JOLTS Job Openings data for April, and ADP Employment Change for May suggested that the labor demand is easing.

Also, a higher number of individuals claiming jobless benefits for the first time for the week ending May 31 at 229K against their estimates of 220K and the prior release of 221K adds to doubts that the labor market strength is easing. In today’s session, the US NFP report will provide significant cues about the US labor market's health.

Meanwhile, the Swiss Franc has performed relatively stronger against the US Dollar in past few trading sessions amid expectations that the Swiss National Bank (SNB) could intervene in currency markets to bolster the currency in way to build pressure on inflation, which has been prompted due to competitive Swiss exports. The demand for Swiss exports strengthened globally due to weak Swiss Franc.