Crucial for the Fed will be the payrolls report on Friday where analysts look for a rise of 165,000 in jobs and a dip in the unemployment rate to 4.2%.

“The risks going into this crucial release seem highly asymmetric as a solid report is very unlikely to derail the September cut,” said Barclays economist Christian Keller.

“In contrast, a weak report would likely validate the popular narrative that the US economy and labour market are on the precipice, necessitating a fast and deep cutting cycle, leading to another sharp repricing.”

Fed Governor Christopher Waller and NY Fed President John Williams happen to be speaking after the job data, giving the market a near-instant reaction.

Also important this week will be the ISM surveys, JOLTS job openings and ADP employment, trade and the Fed’s Beige Book.

Those risks kept investors cautious and S&P 500 futures dipped 0.1%, while Nasdaq futures eased 0.2%.

Asian markets mostly followed Friday’s rally on Wall Street, with Japan’s Nikkei up 1.0% and adding to last week’s 8.7% bounce.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1%, while South Korean stocks were flat.

Cash Treasuries were untraded for the holidays, while Treasury futures were little moved. Ten-year yields stood at 3.914% after rising in the wake of Friday’s inflation and spending data.

That rise underpinned the US dollar at 146.55 yen , having rallied 1.2% last week and it now faces chart resistance around 148.54.

The euro was stuck at $US1.1046, after losing 1.3% last week, with political uncertainty in Germany not helping.

The European Central Bank is considered certain to cut its rates by a quarter point next week following benign EU inflation figures.

“However, the path after is less clear with financial markets currently pricing around [one to one or two] cuts over the remaining two meetings of the year,” said Joseph Capurso, head of international economics at CBA.

“We have one more cut in 2024 after September, but acknowledge that it will be a close call between one or two more cuts.”

The firmer dollar combined with higher bond yields to pressure gold prices at $US2502 ($A3698) an ounce, short of its recent all-time top of $US2531.60 ($A3741.65).

Oil prices lost more ground as the market pondered the prospect of increased supply from OPEC+ in October.

Brent fell 41 cents to $US76.50 ($A113.07) a barrel, while US crude lost 38 cents to $US73.17 ($A108.14) per barrel.

-By Wayne Cole of Reuters