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.

The yuan fell in Asian trade on Tuesday against a basket of major rivals, sharpening losses for the second day against the US dollar and plumbing 13-month lows after US President-elect Donald Trump threatened a 100% tariff on BRICS countries, including China. 

Risks mounted for the Chinese economy as the odds of higher US tariffs on Chinese products increased, with the economy still facing slower growth and weak internal and external demand. 

Such challenges underscore the need for yet another government fiscal and monetary intervention to boost the economy and support growth.

The Price 

The US dollar rose 0.45% against the yuan today to 7.3146, the highest since November 2023, with a session-low at 7.2818.

The yuan lost 0.5% on Monday against the dollar, the heftiest loss since November 8.

The yuan did manage to rise a modest 0.2% last week, the first weekly profit in seven weeks, but marked a heavy 1.75% loss in November overall due to grim Beijing  data, and Trump’s trade threats.

Trump’s Tariff Threats

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

Trump previously vowed to raise tariffs on Mexico and Canada byu 25%, and on China by 10%, citing concerns about illegal immigration and drug trade.

This might be the tip of the iceberg, as Trump vowed an even bigger 60% tariff increase for Chinese products during his election campaign.

Yuan’s Previous Reactions 

During Donald Trump’s first term, yuan weakened by 5% against the dollar following the first round of US tariffs on Chinese commodities in 2018, with another 1.5% drop a year later as trade tensions grew.

Grim Outlook

Now investment banks expect yuan to fall by at least 1.5% to 7.3 against the dollar by the end of 2025.

Citibank’s analysts estimate that a 10-15% US tariff on Chinese imports would weaken the yuan by 1.5-2% at least.

A more aggressive 60% tariffs by Trump would lead to further uncertainty and struggle for China’s currency and the exporting industry.