Asian shares climb ahead of US jobs data

Asian shares surged on Friday in anticipation of key US jobs data, while bonds experienced a brief respite following comments from a top Federal Reserve official. The dollar's decline, which boosted the yen by 2.6% in a week, contributed to the rally. Fed Governor Christopher Waller, in remarks for a Reuters NEXT Newsmaker event, indicated that recent data suggested signs of disinflation, potentially leading to a steady rate at this month's policy meeting.

This shift in sentiment caused futures to reduce the probability of a rate hike this month to 50%, down from around 63% the previous day. Analysts at JPMorgan believe Waller's speech supports the notion that the bar for data influencing a rate hike this month remains high, barring his explicit support. In Asia, stocks tracked broad gains on Wall Street, though the MSCI's Asia-Pacific index excluding Japan remained down 0.4% for the week.

Japan's Nikkei rose 0.8%, while Chinese blue-chips and South Korea's Kospi each gained 1% and 1.1%, respectively. Both Wall Street and EURO STOXX 50 futures were flat as traders awaited the US payrolls report. Forecasts anticipate a rise of 56,000 jobs and a steady unemployment rate of 4.1%. Overnight US economic data revealed a surge in services sector activity and a jump in prices paid to a three-year high.

The Beige Book survey also pointed to a slight uptick in economic activity. Despite some relief in bonds, investors remain cautious about inflation risks, with longer-dated bonds showing little progress in resolving the Iran crisis. Oil prices hovered near a six-week high, with Brent crude futures up 7% this week to US$95.52 a barrel.

The dollar struggled without support from yields, trading at 98.96 against major peers, after falling 0.6% the previous day. This decline could lead to a weekly drop of 0.7%. Analysts at IG noted that while another round of price checks or intervention is not ruled out, it could also be pre-positioning for a soft non-farm payrolls report and a potentially hawkish BOJ meeting in the coming fortnight.