The US Dollar pushed higher following December’s non-farm payroll report on Friday. The headline number from the jobs report fell short of expectations, showing the economy shed 140,000 jobs last month rather than adding 71,000 as forecast. However, wage inflation unexpectedly hit a seven-month high of 5.1 percent on-year.
Investors reacted to the data with an apparent shift away from dovish Fed policy expectations: US Treasury yield curve (10y-2y) steepened and. Gold prices sank.
Shares surged higher after President-elect Biden set out plans for additional fiscal stimulus boost. Upbeat comments from Fed Vice Chair Clarida regarding the recovery in 2021 could have helped.
SOFT CHINESE INFLATION DATA COULD LIFT DOWNBEAT MARKETS
The optimism doesn’t appear to be continuing into the open on Monday as S&P 500 futures are pointing lower and Australia’s ASX 200 has started the Week on the back foot.
December’s Chinese CPI data is in focus in an otherwise quiet economic calendar. On an annual basis the inflation rate is expected to be flat (0.0%) up from November’s -0.5% contraction. However recently readings have tended to miss forecasts. .
Investors could cheer a weaker-than-forecast CPI print moderating risk-off pressure given that such a result gives the PBOC more room to expand its own stimulus efforts.