Swiss franc jumps to two-week high after inflation data
Swiss frank rose in European trade against dollar for the second straight session, hitting two-week highs following strong Swiss inflation data, which hit six-month highs.
Such data showed that inflationary pressures remain high on policymakers and bolstered the case for multiple more rate hikes following the expected March hike.
The dollar fell 0.5% against the franc to 0.9313, the lowest since February 23, after closing up 0.7% on Friday away from three-month lows at 0.9440.
The franc rose 0.5% last week against dollar, the first weekly profit in three weeks as the greenback fell against most major rivals.
Swiss Inflation
Swiss consumer prices rose 3.4% in February, beating estimates of 2.9%, and up from 3.3% in the previous reading.
On a monthly basis, prices rose 0.7%, above estimates of 0.5%, and up from 0.6% in January.
Inflationary Pressures
Such data showed mounting pressure on SNB policymakers and the need to keep tightening policies this year.
Swiss Rates
Swiss interest rates are settled at 1%, the highest since 2008, but the second lowest worldwide.
The latest Swiss inflation data bolstered the case for a 0.5% rate hike by the National Bank in March, the second such a hike in a row.
Thus Swiss rates will thus reach 1.5%, compared to an expected 5% US rates following the March Fed meeting, widening the policy gap between both countries.
Euro gains ground on European rate forecasts
Euro rose in European trade against a basket of major rivals, maintaining gains for a second day against dollar on prospects of multiple more European rate hikes following inflation data.
Dollar was hurt as US 10-year treasury yields tapered off and slipped below 4%, with markets await Fed Chair Jerome's Powell's testimony this week.
EUR/USD rose 0.3% to 1.0657, after rising 0.35% on Friday against dollar following strong European inflation data.
Euro rose 0.85% last week against dollar, the second weekly profit in three months, and the largest since early January.
European Inflation
Recent European data showed consumer prices rose past estimates in February, confirming that inflationary pressures remain strong.
European Rates
Higher European inflation will force the European Central Bank to extend its rate hikes and policy tightening, in turn underpinning the euro.
It's widely expected for the ECB to increase rates by a rapid pace in March following a spike in February inflation.
Minutes of the ECB February meeting showed that members support multiple more rate hikes by the central bank until neutral rates are reached.
ECB President Christine Lagarde asserted multiple more rate hikes might be needed following the planned 0.5% rate hike in March.
The Dollar
The dollar index fell 0.2% on Monday on track for a second session against a basket of major rivals.
US 10-year treasury yields dropped 0.8% to 3.921%, the second loss in a row off four-month highs at 4.089%.
Now investors await Fed Chair Jerome Powell's Congressional testimony this week, and the US payrolls report on Friday to look for clues on the future policy.
Gold climbs as dollar, US treasury yields dip
Gold prices rose on Friday as the dollar declined against most major rivals while US treasury yields took a nose dive.
US Rates
Atlanta Fed President Rafaael Bostic said the Fed will be in a position to end the current cycle of policy tightening by the middle of the year, and that he supports a 0.25% rate hike in March.
Boston Fed President Suzan Collens said policymakers need to increase interest rates to control inflationary pressures.
US 10-year treasury yields fell to 3.991% away from the coveted 4% barrier which was scaled earlier this week for the first time since November 2022.
Earlier data showed US ISM services PMI slowed down to 55.1 in February from 55.2, while still handily beating expectations of 54.5.
The dollar index fell 0.3% as of 17:38 GMT to 104.7, with a session-high at 105.00, and a low at 104.6.
Gold spot prices rose 0.7%, or $12.70 to $1,853.3 an ounce as of 17:39 GMT.