Jan 6 (Reuters) - A look at the day ahead in European

and global markets from Wayne Cole.

Markets have mostly been on a random walk in Asia,

punctuated by reports embattled Canadian Prime Minister Justin

Trudeau might announce his resignation as early as today.

The muted market reaction suggested the news was priced in

and investors could welcome the chance of an early election to

clarify the outlook, nudging the U.S. dollar down 0.3% to 1.4404

Canadian.

The dollar was also off a shade on the other majors, but

underpinned by Treasury yields as the 10-year got within a

whisker of its recent eight-month high of 4.641%. A break of

that would target the 2024 peak at 4.739% and further challenge

equity market valuations.

While the S&P 500 returned 25% last year, it was built on a

very narrow base with almost half of that from just five stocks.

Japanese bond yields were also on the rise, reaching levels

not seen since 2011 at 1.121%, as markets assume the Bank of

Japan will hike sometime soon, even if not this month.

Unfortunately for the yen, Treasury yields have been rising

faster to keep the spread at a chunky 351 basis points in favour

of the dollar.

Meanwhile, Chinese yields keep hitting all-time lows and the

yuan touched a 16-month trough on Monday at 7.3286 per dollar.

Dollar bulls are now counting on a host of Federal Reserve

speakers this week to sound cautious about cutting rates much

further, with a focus on influential Fed Governor Waller on

Wednesday.

Service PMIs due later on Monday should echo the U.S.

economic outperformance, though there's a chance the German CPI

could surprise on the upside and offer the euro some aid.

All this is just a taster for the payrolls main course on

Friday. Wall Street needs the jobs report to be firm enough to

augur well for economic growth and earnings, but not so strong

that it makes it even harder for the Fed to keep cutting rates.

Median forecasts are for jobs growth of 150,000 and an

unemployment rate of 4.2%, but analysts caution quirks in the

seasonal factors could depress jobs by around 50,000. There's

also a chance the jobless rate could round up to 4.3%, given it

was 4.246% in November.

One added twist is the annual revisions of seasonal factors

for the household survey, which could see the unemployment rate

revised down for recent months.

So much for a "clean" reading.

Key developments that could influence markets on Monday:

- German CPI for Dec, service PMIs for Europe and U.S., Nov

U.S. factory orders

- Fed Governor Lisa Cook speaks on the economic outlook