Swiss franc fell in European trade on Wednesday against a basket of major rivals, on track for the fourth profit in a row against the greenback, and plumbing three-month lows as inflationary pressures on the Swiss National Bank subside. 

On the other hand, inflation persists in the US, heaping pressure on the Federal Reserve and hurting the odds of early US interest rate cuts in the first half of the year. 

USD/CHF

USD/CHF rose 0.15% to 0.8882, a November 17 high, with a session-low at 0.8857.

The franc lost 1.3% against the dollar on Tuesday, the largest loss in 2024 following scorching US inflation data. 

Swiss Inflation

Earlier data showed Swiss consumer prices rose 1.3% y/y in January, below estimates of 1.7%. 

It’s the weakest reading since October 2021, a sign of slowed inflation, in turn paving the way for a Swiss rate cut in March.

The Dollar

The dollar index rose 0.1% on Wednesday on track for the third profit in a row against a basket of major rivals, hitting a three-month high at 104.98. 

The gains came following US consumer prices data which showcased the growing inflationary pressures on Fed policymakers. 

The likelihood of a US interest rate cut in March tumbled to just 9%, while the odds for such a cut in May fell to 37%. 

Gold prices fell in European trade on Wednesday, sharpening losses for the sixth straight session and plumbing two-month lows after giving up $2000. 

Such losses came amid growing pressures from higher US 10-year treasury yields, after strong US inflation data hurt the odds of early Fed rate cuts in March and May. 

Gold Prices Today

Gold prices fell 0.2% to $1,988 an ounce, the lowest since December 13, with a session-high at $1,993. 

Gold prices lost 1.45% on Tuesday, the fifth loss in a row, and the largest in 2024 due to US inflation data.

US Treasury Yields 

US 10-year treasury yields rose 0.4% on Wednesday, extending gains for the sixth straight session, and hitting an 11-week high at 4.332% and pressuring non-yielding assets. 

Such developments came after bullish US inflation data reduced the likelihood of early US rate cuts this year.

US Inflation Data

Official US data showed consumer prices rose 3.1% y/y in January, above estimates of 2.9%, and down from 3.4% in the previous reading.

Core prices, excluding food and energy, rose 3.9% y/y, beating estimates of 3.7%, and the same as the previous reading. 

US Rates 

Such data reduced the odds of a US interest rate cut in March to just 9%, while the odds of such a cut in May tumbled to just 37%. 

Traders now expect four US rate cuts this year totalling 100 basis points, down from previous expectations of six rate cuts totalling 150 basis points back in January. 

The SPDR 

Gold Holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 840.48 tonnes, the lowest since August 2019. 

Yen rose in Asian trade on Wednesday against a basket of major rivals, recovering from three-month lows against the dollar after warnings from Japanese authorities. 

After yen pierced the 150 barrier against the dollar, Japanese officials asserted their readiness to interfere in support of the currency. 

JPY/USD 

USD/JPY fell 0.25% to 150.43, with a session-high at 150.78, after losing 1% on Tuesday, the second loss in a row, and the largest since February 2, plumbing three-month lows at 150.88 following strong US consumer prices data. 

Such data reduced the odds of a US interest rate cut in March to just 9%, while the odds of such a cut in May tumbled to just 37%. 

 As interest rates in the US remain high for an extended duration to combat inflation, concerns about the rate gap with Japan grew. 

Japanese Warnings

Japanese forex officials warned on Wednesday that authorities are monitoring forex movements closely, and will take necessary measures to support the local currency if needed. 

They said the latest moves were too quick and could have a negative impact on the Japanese economy. 

Palladium prices fell on Tuesday to 2018 lows amid concerns about the demand-supply balance in the market.

Palladium tumbled 39% in 2023 after strong gains in 2018-2022 due to automotive demand, however it has recently been substituted by the cheaper platinum in the manufacturing of catalytic converters to reduce harmful emissions in cars. 

Also as EV cars spread in the market, the prospects for palladium worsened further. 

It means that as demand diminishes for the metal, supply remains stable, creating an imbalance.

On the other hand, platinum is on a more favorable ground for its extensive usages outside the automotive sector, including in jewelry. 

As for the stable palladium supply argument, it’s because palladium is usually mined in a basket with other metals, which curtails the ability to control the production of the metal.

South Africa and Russia produce 80% of global palladium supplies, with the rest mined in North America. 

No announcements of reduced production have been made from Russian or South African major producers so far. 

A Reuters source in a major mining company said that South Africa and America won’t pause production or reduce it. 

Otherwise, the dollar index rose 0.6% as of 16:22 GMT to 104.7, with a session-high at 104.8, and a low at 103.9.

Palladium March futures tumbled 4.5% as of 16:24 GMT to $856 an ounce, a five-year trough, while platinum slipped 1.9% to $879.9 an ounce.