By Wayne Cole and Amanda Cooper

SYDNEY/LONDON (Reuters) – Global stocks edged on Monday ahead of a week crammed with US economic data that could be pivotal in setting expectations for interest rates, although high political uncertainty prevented any new year motivation to check.

In China, the yuan hit a 16-month low and blue-chip stocks traded at their weakest since late September, prompting the country’s stock exchanges and central bank to defend a falling its markets and ease investors’ concerns about the impact on the world’s second largest economy. on the imminent return of Donald Trump to the White House.

Meanwhile, reports on Monday suggested that embattled Canadian prime minister Justin Trudeau may announce his resignation later in the day.

Markets seem to have priced this in and may welcome an election to clear things up, leaving the US dollar up 0.4% at 1.4393 against its Canadian counterpart.

The MSCI All-World index rose 0.1%, reflecting a slightly patchy performance in Europe, where the increase was 0.1%, while – 2024’s top-performing major European index, rose 0.2%.

US stock index futures rose 0.1-0.3%, suggesting an extension of Friday’s rally in the benchmark indices.

“We started the new trading week, and new trading year, with stocks that enjoyed a strong rally on Friday, where both and erased all the declines seen a day before, with S&P volumes 20% below the 20-day average,” said Pepperstone senior research strategist Michael Brown.

Adding to the sense of caution is the anticipation of the US December employment report on Friday, where analysts expect an increase of 150,000 in the number of workers in nonfarm payrolls and for unemployment to remain at 4.2%.

It will feature ADP hiring data, job openings and weekly jobless claims, along with surveys of manufacturing, services and consumer sentiment.

Any upbeat would support the case for fewer rate cuts from the Federal Reserve, and markets have already scaled back expectations to 40 basis points for 2025.

Investors will also have a chance to get some insight into the thinking of Fed officials this week, with minutes from the central bank’s last meeting on Wednesday and several top policymakers speaking including influential Fed Governor Christopher Waller due to speak as well.

Inflation figures from Germany on Monday and for the euro zone on Tuesday may help refine the outlook for further rate cuts from the European Central Bank. Traders now expect the ECB to deliver four quarter-point cuts this year.

HIGHEST YIELD

In fixed income, US Treasury yields rose for a second day to 4.624%, a whisker from last week’s eight-month high of 4.641%. Yields rose nearly 80 basis points in the fourth quarter, with more than 30 bps in December alone.

Investor appetite will be tested this week by the sale of $119 billion in new three-, 10- and 3-year Treasuries.

“(The) key level to watch for US 10-year notes remains May 2024 high at 4.64%, a break above that could signal an extension to 4.75%,” analysts of Saxo Bank said.

High yields give the dollar a natural source of support. , which rose 0.9% last week, fell 0.3% on Monday, largely as a function of gains in the euro and sterling.

The euro rose 0.25% on the day to $1.03365, just ahead of resistance around $1.0340, while the pound regained some ground after hitting an eight-month low last week to trade up 0.4% at $1.2472.

The local session ended Monday at 7.3296 per dollar, the weakest since September 2023.

Oil found support from colder weather in Europe and the United States, with a winter storm bringing snow, ice and freezing temperatures to a wide swath of the US on Sunday.

But early gains faded and fell 0.4% to $76.22 a barrel, while prices in Europe fell 1% to 49.10 euros per megawatt hour (MWh), near a 14-month high.