The US dollar tumbled in European trade on Tuesday, resuming losses and approaching two-week lows following bearish remarks from some Fed officials, which boosted the odds of a 0.25% Federal Reserve interest rate cut in December. 

Now investors await a batch of crucial US labor data later today and throughout the week to gather more clues. 

The Index

The dollar index fell 0.2% today to 106.16, with a session-high at 106.60.

On Monday, the index rose 0.6% away from two-week lows at 105.62.

The greenback rallied after US President-elect Donald Trump threatened the BRICS countries with 100% tariffs.

Fed Remarks 

Federal Reserve Member Christopher Waller said on Monday that as inflation heads firmly towards 2%, he supports another interest rate cut later this month.

New York Fed President John Williams said it might be appropriate to move towards a more neutral policy position gradually. 

US Rates

Following the remarks and according to the Fedwatch tool, the odds of a 0.25% December rate cut by the Federal Reserve rose to 73%.

Now investors await a batch of US labor data this week, including job opportunities, private sector employment, unemployment claims, and the crucial US payrolls report on Friday. 

Several Fed officials will talk as well this week, including Fed Chair Jerome Powell on Wednesday. 

Switzerland’s consumer prices rose 0.7% y/y in November, below estimates of 0.8%, but up from 0.6% in October.

On a monthly basis, prices fell 0.1% as expected, same as October. 

The data bolsters the case for the fourth interest rate cut by the Swiss National Bank this year. 

Gold prices rose in European trade on Tuesday and resumed their gains as the dollar lost ground against a basket of major rivals. 

Recent bearish remarks from Fed member Christopher Waller boosted the odds of a 0.25% Federal Reserve interest rate cut in December, as markets now wait for crucial US labor data this week. 

The Price 

Gold prices rose 0.45% to $2650 an ounce, with a session-low at $2634.

On Monday, gold slid 0.45% as well, the first loss in five sessions as both the dollar and US yields rebounded. 

The US Dollar

The dollar index fell 0.2% on Tuesday, resuming losses and approaching two-week lows against a basket of major rivals. 

Waller 

Federal Reserve Member Christopher Waller said on Monday that as inflation heads firmly towards 2%, he supports another interest rate cut later this month.

New York Fed President John Williams said it might be appropriate to move towards a more neutral policy position gradually. 

US Rates

Following the remarks and according to the Fedwatch tool, the odds of a 0.25% December rate cut by the Federal Reserve rose to 73%.

Now investors await a batch of US labor data this week, including job opportunities, private sector employment, unemployment claims, and the crucial US payrolls report on Friday. 

Several Fed officials will talk as well this week, including Fed Chair Jerome Powell on Wednesday. 

SPDR 

Gold holdings at the SPDR Gold Trust fell 2.59 tons yesterday to a total of 875.96 tons, the lowest since November 20. 

The euro fell in European trade on Tuesday on track for the second loss against the dollar amid mounting risks for the eurozone economy.

In France, the eurozone’s second largest economy, political tensions flared as the government faces collapse due to budget disputes. 

Otherwise, US President-elect Donald Trump threatened 100% tariffs on any BRICS countries that attempt to dislodge the dollar as a trade currency. 

The Price 

The EUR/USD pair fell 0.2% today to $1.0480, with a session-high at $1.0501, after closing down 0.75% on Monday, the second loss in three days away from a two-week high at $1.0597 on active profit-taking.

French Political Tensions 

The ultra-right national coalition in France said the government refused their calls for more budget concessions, which raises the odds of a no-confidence vote that might break down the current government. 

As France potentially faces a wider budget deficit on the level of Greece, the yield spread with Germany reached 2012 levels. 

Trump Trade Threats 

US President-elect Donald Trump warned the BRICS countries of massive 100% tariffs if they tried to move away from the dollar and use a different official currency for trade. 

And during his campaign, Trump warned the eurozone will pay a heavy price for not buying enough US exports. 

Trump has vowed to raise tariffs on European imports, chief of which automobiles, which would sour relations with the European allies. 

European Rates

The odds of a 0.25% interest rate cut by the European Central Bank in December stood at 90%. 

Now markets await more clues, including data and speeches by ECB officials, to gather more clues.