Global shares edge up
Correlation with dollar softens
Yen takes a breather from recent rally

LONDON, Jan 3 Reuters The dollar headed for its largest oneday rise in over three months on Tuesday, while equities rallied in a macropacked week that could offer a steer on when, and at what level, U.S. interest rates might peak.

The MSCI AllWorld index was roughly unchanged, although European stocks, led by hefty gains in anything from financials, to oil and gas stocks, to healthcare, bounced to twoweek highs.

Typically, stocks tend to fall when the dollar gains, but that negative correlation between the two softened on Tuesday to its weakest since early September. The dollar index was last up 1 at 104.69.

The euro was the worstperforming currency against the dollar , falling by the most since late September, after German regional inflation data showed consumer price pressures eased sharply in December, thanks in large part to government measures to contain natural gas bills for households and businesses.

Data on U.S. payrolls this week are expected to show the labour market remains tight, while EU consumer prices could show some slowdown in inflation as energy prices ease.

Energy base effects will bring about a sizeable reduction in inflation in the major economies in 2023, but stickiness in core components, much of this stemming from tight labour markets, will prevent an early dovish policy 39;pivot39; by central banks, analysts at NatWest Markets wrote in a note….