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Asia shares are wary of U.S. inflation, and Bitcoin is attempting to maintain stability.

Berita 24 English - On Monday, Asian stocks were cautious as investors awaited major U.S. inflation numbers for clues on monetary policy, w...

Berita 24 English
- On Monday, Asian stocks were cautious as investors awaited major U.S. inflation numbers for clues on monetary policy, while Bitcoin struggled to recover after being crushed by the news of China's crackdown on cryptocurrency mining and trade.

In lethargic trade, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent. The Nikkei in Japan gained 0.2 per cent, while Chinese blue chips fell 0.5 per cent.

Nasdaq futures were unchanged, while S& P 500 futures rose 0.2 per cent. The EURO STOXX 50 futures and the FTSE futures both increased by 0.1 per cent.

After surveys of global service industries indicated phenomenal growth on Friday, all eyes will be on personal consumption and inflation numbers in the United States this week.

A strong estimate for core inflation would raise red flags and reignite discussion of a US Federal Reserve rate cut sooner rather than later.

This week's calendar features a slew of Fed speakers, including Lael Brainard, the important Fed Board Governor, and investors will be watching to see if they keep to the script on policy patience.

According to BofA's monthly Fund Manager survey, a record-high 69 per cent of respondents forecast global economic growth and inflation to be above trend.

As a result, managers flocked to commodities and late-cyclical, where overweight positions were near 15-year highs, with Bitcoin being the most crowded play.

"With such strong views on growth and inflation, the risk for investors is that growth slows and inflation is only temporary," according to a note by BofA analysts.

"Also, Tech, which was earlier considered as overcrowded, is now back to an underweight position and would likely profit if inflation fears faded."

Bitcoin was prone to a selloff due to the crowded market, as investors rushed to the exits in droves, driving the price down 50% from its all-time high. The cryptocurrency fell 13% on Sunday alone but was the last trading at $35,208, up 1.5 per cent.

It was harmed partly by China's crackdown on cryptocurrency mining and trading as part of ongoing efforts to prevent speculative and financial risks.

In comparison, the major currencies remained subdued, with the euro remaining at $1.2180 after repeatedly failing to break through chart resistance near $1.2244 last week.

The dollar was stuck at 108.94 against the yen, trapped between support at 108.56 and resistance near 109.33. The dollar had stabilized at 90.032 against a basket of currencies, falling to its lowest level since January of 89.646 on Friday.

The dollar's weakness, combined with inflation fears and the wild volatility of cryptocurrencies, has reintroduced gold into favour. The metal was last trading at $1,884 an ounce, having reached a record high in January.

"The recent combination of a strong US CPI, weak employment, and Fed policymakers willing to allow inflation to overshoot while addressing the employment gap may keep gold bullish for a while longer," said Michael Hsueh, Deutsche Bank's commodities and foreign exchange strategist.

"Gold's recovery has been accompanied by a strong rally in certain sectors of the commodities complex, which has been increasingly represented this year by agriculture, metals, and transportation indices, as well as an eight-year high in 10-year US inflation expectations."

Oil prices increased marginally as a storm formed in the Gulf of Mexico. Iran announced the expiration of a three-month nuclear monitoring deal, casting doubt on the future of indirect talks to lift US sanctions on Iranian crude exports. [R/O]

Brent crude was up 63 cents to $67.06 a barrel at the time of writing, while US crude gained 61 cents to $64.19 a barrel.

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