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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Canadian dollar firms on reports of Trudeau resignation

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USD underpinned by high yields ahead of payrolls

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Nikkei slips, Wall Street and European futures mixed

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Fed speakers, EU and China inflation data pack the diary

(Updates prices)

By Wayne Cole

SYDNEY, Jan 6 (Reuters) - Share markets were mixed in

Asia on Monday ahead of a week brimming with economic news that

should underline the relative outperformance of the United

States and support the dollar's ongoing bull run.

Political uncertainty remained as reports suggested

embattled Canadian Prime Minister Justin Trudeau might announce

his resignation as early as Monday.

Markets seemed to have priced it in and might welcome an

election to clarify matters, so the U.S. dollar dipped 0.3% on

its Canadian cousin to 1.4404.

The star of the U.S. data line up is the December payrolls

report on Friday, where analysts expect a rise of 150,000 with

unemployment holding at 4.2%.

These will be previewed by data on ADP hiring, job openings

and weekly jobless claims, along with surveys on manufacturing,

services and consumer sentiment.

Anything upbeat would support the case for fewer rate cuts

from the Federal Reserve, and markets have already scaled back

expectations to just 40 basis points for 2025.

Minutes of the Fed's last meeting due Wednesday will offer

colour on their dot plot predictions, while there will be plenty

of live comment with at least seven top policy makers speaking

including influential Fed Governor Christopher Waller.

Inflation figures from the EU and Germany this week will

refine the outlook for more rate cuts from the European Central

Bank, while China's consumer prices on Thursday is expected to

support the case for further stimulus there.

With so much event risk ahead, investors were understandably

cautious and global indexes were mixed. MSCI's broadest index of

Asia-Pacific shares outside Japan gained 0.6%,

having lost 1% last week.

Japan's Nikkei returned from holiday to drop 1.8%,

pressured in part by a rise in JGB yields to the highest since

2011. South Korean stocks rallied 1.6%, though the fate

of President Yoon Suk Yeol seems no clearer.

Chinese blue chips dipped 0.1%, even as a survey

showed services activity expanded at the fastest pace in seven

months in December.

THE FORTUNATE FEW

EUROSTOXX 50 futures added 0.3% and DAX futures

0.2%, while FTSE futures eased 0.1%.

Futures for the S&P 500 and Nasdaq were both

barely changed in light volumes.

Analysts at Goldman Sachs noted the S&P 500 boasted a total

return of 25% in 2024, the second year of gains above 20% and

the last time that happened was 1998/99.

The rally was narrow, with almost half the rise coming from

just five stocks, yet Goldman expects another 11% increase this

year driven by a similar rise in earnings. Reports for the

latest earnings season start to flow on Jan. 15.

The U.S. bond market has not been so fortunate and 10-year

yields inched higher to 4.631%, very close to last

week's eight-month top of 4.641%.

Investor appetite will be sorely tested this week by the

sale of $119 billion in new three-, 10- and 3-year Treasuries.

The steady climb in yields kept the dollar index up at

108.870, having risen almost 0.9% last week to a top of

109.540.

The euro was hanging on at $1.0315, uncomfortably

close to last week's 26-month trough of $1.0225. It now faces

resistance around $1.0340, as trend-following funds continue to

hunger for the psychological $1.000 level.

The dollar had broadened its advance last week to sweep over

sterling as well, driving it to an eight-month low of $1.2349.

The pound was last looking none too steady at $1.2435.

The risk of Japanese intervention kept the dollar restrained

at 157.70 yen, just short of last month's high of

158.09.

The strength of the dollar was a hurdle for gold, keeping

the metal at $2,637 an ounce.

Oil had found support from colder weather in Europe and the

United States, with a winter storm bringing snow, ice and

freezing temperatures to a broad swath of the U.S. on Sunday.

But early gains faded and Brent eased 16 cents to

$76.35 a barrel, while U.S. crude dipped 15 cents to

$73.81 per barrel.