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Talking Points

  • All major Asian bourses slipped into the red on Friday
  • Weaker US stocks, higher bond yields and the wait for US payroll numbers all took a toll
  • The US Dollar was steadier however

What does the coming quarter hold for your top currency pick? The new DailyFX forecasts are ready

Asian stock markets endured a soft Friday, hit by a weaker Wall Street lead, higher bond yields and the almost inevitable caution which precedes official US labor statistics which are due later in the global day.

Bond yields have risen- often sharply- in anticipation of more hawkish developed-market central bank monetary policy, offering yield hungry investors more enticing risk-free choices. Sure enough the Nikkei 225 fell by 0.3%, with the ASX 200 off by nearly 1% and all major indexes in the red.

Foreign-exchange markets were torpid before those US numbers, but the Dollar rose against the Japanese Yen despite news of stronger cash earnings in Japan. However, while wages are rising they continue to do so at a very modest pace. A quarterly report released later found Japanese households ready to believe that consumer price inflation will hit the Bank of Japan’s 2% annualized target, but not for twelve months. Australia’s construction sector was revealed to have enjoyed a pretty strong June.

Oversupply fears returned with a vengeance to hit crude oil prices which fell by more than 1%. News of a rise in US production added to weight on the market provided by earlier reports of increased output from more traditional producers. Gold prices edged lower once more as those bond yields rose; higher yields tend to dull the appeal of non-yielding gold. The metal didn’t fall far during Friday’s Asian trade but remains on course for its worst week since early May.

There’s plenty of scheduled economic news coming up before global investors can get their weekend under way. Official US labour stats will of course top the bill, with a rise of 178,000 expected for June’s nonfarm payroll count. Support acts for this main event will include UK industrial production and trade data and Canada’s own unemployment report.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX