Asian stocks inch ahead as traders brace for inflation data
By Ankur Banerjee
SINGAPORE (Reuters) — Asian stocks edged higher on Tuesday, while the dollar was at its lowest in three months as investors remained convinced the Federal Reserve was done with its rate-hike cycle and looked ahead to a crucial inflation report later this week.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.39% higher and set for a near 7% gain in November, its strongest monthly performance since January.
Japan's Nikkei eased 0.20% but is up 8% this month, on course for its strongest monthly performance in three years.
«The outlook for central bank policy has been a big factor driving the improvement in risk appetite in November,» said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY).
The evidence of an easing inflationary pressures has supported the view that many central banks are done with their tightening cycles and rate cut expectations for next year have been brought forward, Catril said.
Markets are pricing in a 96.8% likelihood that the U.S. central bank will leave interest rates unchanged next month, with the possibility of a rate cut starting to gain ground in mid-2024, according to CME's FedWatch tool.
Investors will focus this week on the Fed's preferred measure of inflation on Thursday and euro zone consumer inflation figures for further clarity on the where inflation is headed.
European Central Bank President Christine Lagarde said on Monday the central bank's fight to contain price growth is not yet done, citing a still strong wage growth and an uncertain outlook even as inflation pressures in euro zone ease.
Fed Chair Jerome Powell is also due to speak on Friday his words will be scrutinized by traders to gauge where rates may head.
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