Swiss franc gains made headlines on the session following a majorly disappointing August non-farm payrolls report.  According to the US Labor Department, payroll employment in the world’s largest economy was unchanged for the month – no jobs were created or lost in the last 30 days or so.  The number is far worse when taking a look at the details.  If today’s report is any indication of things to come, there may be more Swiss franc gains to come.

According to the finer details of the US Labor Department report, sector hirings stalled while key drivers of US employment in the past lost some strength.  Government hiring was one such sector.  National government positions actually fell by 17,000 in August – with local government employment falling by 20,000.  Factory positions additionally declined by 3,000 as private payroll hiring increased by 17,000.  Although a positive in the overall pessimistic report, private sector hiring growth in August was the thinnest increase in almost 18 months.

Making things worse, both June and July reports were downwardly revised, reducing both of the previous reports by an almost combined 60,000 positions.

All in all, the September 2nd report is evidence enough of a need for further stimulus in the economy – which is speculated to happen through a QE3 decision come the next Federal Reserve meeting set for September 20-21.

Source: FXAlliance Charts

The fear of further US economic weakness will likely continue to be combined with a safe haven market attitude – boosting risk aversion assets like gold and Swiss franc in the near term.  The franc, which has rebounded by 13% since SNB intervention a couple of weeks ago, is now about 5% higher against the US dollar.  The major currency rebounded in the overnight – dropping by almost 150 pips for the second straight session.

More gains can be expected if the USDCHF currency pair breaks through technical support levels – currently at 0.7794.  Should the exchange rate downwardly penetrate through this level, there is speculation that a test of both 0.7653 and 0.7500 would be seen in the next couple of sessions.  This scenario is highly likely considering the Swiss National Bank’s approaches recently.

Source:  FXAlliance Charts