- Investors await US jobs and inflation data for rate-cut clues
- Bitcoin at two-week lows as risk-off mood takes hold
- Focus on BoE, ECB, BOJ policy decisions this week
SINGAPORE, Dec 16 (Reuters) - Asian equities tumbled while the dollar drifted near two-month lows on Tuesday, as investors adopted a cautious approach ahead of a slate of U.S. data, including the jobs report, that may help gauge the trajectory for Federal Reserve policy next year.
The defensive mood kept risk assets under pressure, including bitcoin , which hit a two-week low in the previous session and was down 0.3% at $86,017.67. Nasdaq futures slid 0.8% and European futures fell 0.5%.
Technology stocks fell in Asia, with South Korea's KOSPI down 1.8% and Taiwan's benchmark index down 0.8%, while Hang Seng's tech index dropped 2.7%. That left MSCI's broadest index of Asia-Pacific shares outside Japan down 1.45% to its lowest in three weeks.
On top of the combined U.S. employment reports for October and November due later on Tuesday, investors are also watching out for the inflation report on Thursday, although a number of key details will be missing after the longest government shutdown in history prevented data collection.
"With key jobs data ahead, investors don’t want to be caught long crowded, long-duration trades if rates reprice higher. That’s why tech is the first domino," said Charu Chanana, chief investment strategist at Saxo.
The Fed last week cut interest rates as expected and predicted one more rate cut in 2026 though markets are pricing in at least two more next year, highlighting the importance of economic data in the near term.
"If the data is mixed to slightly softer, then the soft-landing narrative stays intact, but it may not be the kind of backdrop that sparks a big risk-on rally," Chanana said.
"The real risk is a hawkish surprise. If inflation or jobs print hotter, yields pop higher and risk assets, especially long-duration growth, feel it first."
Speculation has been rife over a possible frontrunner as Fed Chair Jerome Powell's term ends in May. Expectations for a dovish Fed chair have also boosted bets for rate cuts next year.
CENTRAL BANK BONANZA
The focus this week will also be on policy decisions from the Bank of England, the European Central Bank and the Bank of Japan. The BoE is expected to cut rates, while the BOJ is likely to hike, and the broad consensus on the ECB is that rates will remain steady, although questions linger on whether a rate hike for Europe next year is on the cards.
In currencies, the euro was at $1.1751, having touched its highest since the start of October in the previous session. Sterling was a tad weaker at $1.3368. The dollar index , which measures the U.S. currency against six others, held steady at 98.295, but remained rooted near its lowest in nearly two months.
The Japanese yen firmed to 155.07 per U.S. dollar ahead of the BOJ policy decision on Friday, with markets all but pricing in a rate hike - meaning the spotlight will be on any clues on what comes in 2026.
"The market reaction will depend on the nuances of the BOJ’s communication and if Governor (Kazuo) Ueda can create a hawkish impression without being able to fully pre-commit on the timing of further hikes," said Gregor Hirt, global CIO for multi asset at Allianz Global Investors.
"There is a risk the BOJ stresses data dependence and opts to assess the effects of this hike before clearly signalling further moves, which markets may interpret as cautious or dovish."
In commodities, oil prices fell as investors considered the impact of a potential Russia-Ukraine peace deal.
Brent crude futures fell 0.54% to $60.23 a barrel, and U.S. West Texas Intermediate crude was at $56.48 a barrel, down 0.6%. Both contracts slid more than 4% last week, weighed down by expectations of a global oil surplus in 2026.
Gold prices fell about 0.6% to $4,275.41 per ounce, dipping below the eight-week highs it had been trading around last week.
Reporting by Ankur Banerjee in Singapore; Editing by Shri Navaratnam and Jacqueline Wong
Source: Reuters