Insights 
VT 
Currency Updates
The Consumer Price Index (CPI) in Switzerland remained unchanged year-over-year in November, standing at 0%. This figure fell short of the anticipated 0.1% increase, reflecting a discrepancy between expectations and actual inflation performance.
In related currency updates, the Pound Sterling continued its recovery momentum, and the EUR/USD pair maintained stability amid favourable Eurozone services data. Meanwhile, Gold prices hovered near daily lows, retaining support above $4,200 despite various market pressures.
Chainlink experienced a boost in momentum, seeing a near 7% rise following Grayscale’s LINK ETF launch. Additionally, several altcoins like Pudgy Penguins and Sui recorded double-digit gains as Bitcoin’s price surged to exceed $92,000.
Looking ahead, strategic preparedness in the White House addresses potential overruling of tariffs, with alternative policies being considered. This suggests ongoing economic adjustments in the face of shifting regulatory landscapes.
Swiss Economic Indicators
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The Swiss consumer price index coming in at zero for November is a major signal for us. This deflationary pressure, below even low expectations, practically forces the Swiss National Bank’s hand ahead of its policy meeting next week. We should anticipate a dovish stance, likely involving a rate cut to weaken the franc.
Given this, we see opportunities in positioning for a weaker Swiss franc, especially against the euro. Eurozone services data has been upbeat, creating a clear policy divergence between the European Central Bank and the SNB. We can look at buying EUR/CHF call options or selling CHF futures to capitalize on this expected move.
This Swiss development is happening while the US dollar is also weak on expectations of a Federal Reserve rate cut. As of this morning, fed funds futures imply a 92% probability of a 25-basis-point cut at the FOMC meeting next week. This broad dollar weakness is what’s supporting gold above $4,200 and helping Bitcoin push past $92,000.
We must remember the SNB has a history of sharp, unexpected moves, like the de-pegging of the franc back in January 2015 which caused extreme market volatility. This suggests that implied volatility on CHF pairs will likely increase as we approach the SNB’s announcement. Traders could consider buying straddles on USD/CHF to trade this expected rise in volatility itself.
