By Wayne Cole
SYDNEY (Reuters) -Asian stocks edged up and the dollar slid on Monday after global equities enjoyed their best week in nine months on expectations the U.S. economy would dodge a recession and cooling inflation would kick off a cycle of interest rate cuts.
The prospect of lower borrowing costs saw gold clear $2,500 an ounce for the first time and the dollar dip against the euro, while the yen made a sudden lunge higher that weighed on the Nikkei.
Federal Reserve members Mary Daly and Austan Goolsbee were out over the weekend to flag the possibility of easing in September, while minutes of the last policy meeting due this week should underline the dovish outlook.
Fed Chair Jerome Powell speaks in Jackson Hole on Friday and investors assume he will acknowledge the case for a cut.
“Although it may be too early to declare victory – and central bankers will certainly be prudent to avoid this in their official rhetoric – the inflation scare that had dominated the policy debate since prices started to soar during the pandemic has now largely vanished,” said Barclays economist Christian Keller.
“Inflation may not be quite at the 2% target yet, but it is close and going in the right direction.”
Futures are fully priced for a quarter-point move, and imply a 25% chance of 50 basis points with much depending on what the next payrolls report shows.
Analysts at Goldman Sachs cautioned that annual benchmark revisions to the jobs series are due on Wednesday which could see a large downward revision of between 600,000 and one million positions, though this would likely overstate the weakness of the labour market.
