HONG KONG - Asian markets dropped and the dollar edged up Monday after a forecast-beating US inflation reading dampened hopes for a more dovish tilt by the Federal Reserve in its battle against soaring prices.
The producer price index reading for November followed data showing the jobs market remained tight, suggesting the central bank would likely need to keep hiking interest rates.
Investors are now looking to the release later in the day of key consumer price index figures, which comes ahead of the Fed's next policy meeting.
READ | Asian markets mixed with focus on US inflation data, Fed meeting
A below-forecast print for October's CPI sparked a rally on markets last month as investors bet on a shorter pace of rate hikes, though concerns about a recession continue to weigh on sentiment.
"An ominous feeling is consuming markets ahead of this week's crucial CPI report and (Fed policy) meeting," said Stephen Innes at SPI Asset Management.
"While headline inflation continues to drop, the top-side beat on PPI expectations suggests that while inflation might climb down the mountain, the slope remains very uncertain."
Policy decisions in the United Kingdom, the European Union and several other economies are also due this week.
All three main indexes on Wall Street fell Friday, and Asia followed suit.