Swiss franc rose in European trade on Monday against a basket of major rivals, extending gains for the second straight session against the dollar away from recent four-month lows.

The gains came following strong Swiss inflation data, with consumer prices rising above expectations, hurting the odds of a rate cut in March. 

USD/CHF

USD/CHF fell 0.25% today to 0.8806, with a session-high at 0.8838, after rising 0.15% on Friday, the first profit in three days off four-month lows at 0.8892. 

 Franc lost 0.3% last week, the fifth weekly loss in a row, as the Swiss National Bank gave up its policies of supporting the local currency to counter inflation. 

The SNB said last December that boosting the franc’s strength isn’t a priority anymore, with risks attached to forex intervention. 

Swiss Inflation 

Earlier data showed Swiss consumer prices rose 1.2% y/y in February, above estimates of 1.1%, while still down from 1.3% in January. 

On a monthly basis, consumer prices rose 0.6%, above estimates of 0.5%, and up from 0.2% in the previous reading. 

Such data could be slightly concerning to SNB policymakers and could delay the decision to cut interest rates. 

Gold prices rose in European trade on Monday, maintaining gains for the fourth straight session and hovering near three-month highs as the dollar lost ground. 

Recent weak US data bolstered the odds of early US interest rate cuts by the Federal Reserve, with investors awaiting more clues this week.

Gold Prices 

Gold prices rose 0.3% to $2,088 an ounce, with a session-low at $2,079, after rising 1.9% on Friday, the third profit in a row, and the largest in 2024 following weak US data. 

Gold prices rose 2.3% last week, the second weekly profit in a row, and the largest in 2024, as both the dollar and US treasury yields declined.

The Dollar 

The dollar index fell 0.15% on Monday, extending losses for the second session against a basket of major rivals.

US 10-year treasury yields hit two-week lows as the odds of early Fed rate cuts increase. 

Weak Data

Recent Washington data showed US manufacturing slowed down more than expected in February, while Michigan University’s consumer confidence index fell as well. 

US personal spending data clocked in the weakest reading in three years.

 US Rates 

Following the data, the odds of a 0.25% Fed interest rate cut in May came at 25%, while the odds for such a cut in June rose to 73%.

Traders now expect 75 basis points of total Fed rate cuts this year, down from 150 basis points in previous forecasts. 

Investors also await important data this week, including the February payrolls report, and Fed Chair Jerome Powell’s Congressional testimony.  

The SPDR

Gold holdings at the SPDR Gold Trust rose 0.86 tonnes on Friday, the first increase since February 16, to a total of 823.77 tonnes. 

Euro rose in European trade on Monday against a basket of major rivals, extending gains for the second straight session against the dollar following consumer prices data released last week, which showed growing inflationary pressures on the European Central Bank.

Such data hurt the odds of early ECB rate cuts this year, with interest  rates likely remaining at high levels for an extended duration.

EUR/USD

EUR/USD rose 0.2% to 1.0853, with a session-low at $1.0835, after rising 0.3% on Friday, the first profit in four days following European inflation data. 

Euro rose 0.2% against the dollar last week, the second weekly profit in a row following bullish remarks by ECB officials, and strong European data last month.

European Inflation 

Initial data showed eurozone’s consumer prices up 2.6% in February, above estimates of 2.5%, while slowing from 2.8% in the previous reading.

Core prices, excluding food and energy rose 3.1%, above estimates of 2.9%, and down from 3.3% in the previous reading.

The readings show the persistent inflation pressures on the ECB, which hurt the odds of an April rate cut. 

ECB

The ECB is convening on Wednesday and Thursday to discuss monetary policies, widely expected to maintain interest rates unchanged at record 2001 highs.

The meeting is expected to provide fresh clues on the future of European monetary policies and interest rates. 

Oil prices advanced on Friday as investors await OPEC+ decisions on supplies, expected to extend voluntary production cuts for the second quarter of the year.

Reuters sources indeed confirmed that OPEC+ is preparing to extend production cuts potentially to the end of the year, with the decision taken in the first week of March. 

On trading, Brent May futures rose 2%, or $1.64 to $83.55 a barrel, marking a weekly profit of 3.4%.

US crude futures due in April closed 2.2% higher, or $1.71 to $79.97 a barrel, clocking in a weekly profit of 4.55%.