SYDNEY : Asian shares edged up on Monday as risk assets basked in the glow of the upbeat October payrolls report, though caution was warranted ahead of a reading on U.S. inflation that could spook the rate horses.
Early moves were modest with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.1per cent. Japan's Nikkei added 0.3per cent, but was just short of the recent five-week peak. Tightness in the labour market combined with dislocation in global supply chains should result in another high reading for U.S. consumer prices due on Wednesday, with any upside surprise likely to rekindle talk of an earlier Federal Reserve hike.
"The longer the FOMC waits to tighten monetary policy, the greater the risk the FOMC tightens more to bring inflation back under control." That led the market to push out the likely timing and pace of tightening not just there, but in Europe and the United States too. Fed Funds now have a rate rise fully priced by September 2022, instead of July, a second not until February 2023 instead of December 2022.The drop took a little steam out of the dollar, which had hit a more than one-year high after the payrolls data. The dollar index was holding at 94.290, from a top of 94.634.