Swiss consumer prices shrank 0.1% y/y in May, the first such contraction since March 2021, matching expectations. 

On a monthly basis, prices rose 0.1% as expected. 

Such data powerfully bolsters the odds of a Swiss interest rate cut in June. 

Gold prices fell in European trade on Tuesday away from four-week highs scaled in Asian trade, amid active profit-taking, while the US dollar rebounded.

It comes ahead of crucial US labor data, which would provide clues on the odds of the Fed rate cuts this year. 

Prices

Gold prices fell 0.9% to $3351 an ounce, with May 8 highs at $3392.

On Monday, gold rallied 2.8%, the second profit in three days, and the largest since May 6 on haven demand amid mounting geopolitical tensions.

US Dollar

The dollar index rose over 0.35% on Tuesday away from six-week lows 99.58 against a basket of major rivals.

The dolar’s recovery comes as the Trump administration seeks to calm recent jitters with China and restore business confidence in the US.

The White House said President Donald Trump and his Chinese counterpart will speak this week after days of mutual accusations of violating the trade agreement in Geneva.

US Rates

Fed official Christopher Waller said rate cuts later this year are still possible even if Trump’s tariffs lead to price pressures.

According to the Fedwatch tool, the odds of a Fed 0.25% June interest rate cut stood at 2%, while the odds of a July rate cut stood at 24%.

Now traders expect 50 basis points of US rate cuts overall this year, starting October.

SPDR

Gold holdings at the SPDR Gold Trust rose 2.87 tons yesterday to a total of 933.07 tons, the highest since May 13.

The euro fell in European trade on Tuesday away from a six-week high against the dollar, scaled in the Asian session, amid active profit-taking, while investors shun new positions before European inflation data for May.

Recent bullish eurozone data and remarks by ECB officials hurt the odds of an interest rate cut this week.

The Price

The EUR/USD price fell 0.2% today to $1.1416, with an April 22 high at $1.1454.

The euro closed up 0.8% on Monday, the second profit in three days on renewed US-China trade tensions.

US Dollar

The dollar index rose 0.3% on Tuesday away from a six-week trough at 99.58 against a basket of major rivals.

The dollar is now boosted as the Trump administration seeks to calm recent jitters with China and restore business confidence in the US.

Now investors await important US labor data, including job opportunities later today, and the crucial payrolls report on Friday.

European Rates

Recent eurozone data showed inflation rose past estimates in April in several countries, renewing pressures on ECB policymakers. 

ECB President Christine Lagarde said the euro could be a practical alternative to the dollar if governments managed to bolster the financial and security structures in the EU.

Now markets estimate a less than 50% likelihood for a 0.25% ECB rate cut in June.

Later today, consumer prices for the whole eurozone will be released, expected to show an increase of 1% in May, down from 2.1% in April, while core prices are expected up 2.4%.

The New Zealand dollar fell in Asian trade on Tuesday against a basket of major rivals, giving up an eight-month high against the dollar on profit-taking.

The odds of a New Zealand rate cut in July took a dip recently, with investors now awaiting important New Zealand data on inflation, unemployment, and growth to gather more clues. 

The Price

The NZD/USD price fell 0.4% today to $0.6011, with an October 2024 high at $0.6055.

Kiwi closed 1.2%5 higher on the dollar on Monday, marking the third profit in four sessions on renewed concerns about US financial assets.

US Dollar

The dollar index rose 0.3% on Tuesday away from a six-week low at 99.58 against a basket of major rivals.

The dollar’s gains come as the Trump administration seeks to calm recent jitters with China and restore business confidence in the US.

Now investors await important US labor data, including job opportunities later today, and the crucial payrolls report on Friday.

New Zealand Rates

Following the Reserve Bank of New Zealand’s policy meeting in May, the odds of a 0.25% rate cut at the July meeting fell below 50%.

Now the futures market expected New Zealand interest rates to settle at 3% by the end of the year, up from 2.75% in previous forecasts.