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Asian markets mostly rose Friday and the yen sat around nine-month highs after another healthy day on Wall Street as investors gear up for an expected US interest rate cut next week.
More data suggesting the Federal Reserve was winning the battle against inflation provided an extra kick for equities after another rollercoaster week that started with big losses fuelled by worries the world's top economy could be heading for recession.
While concern after last Friday's big miss on US jobs creation -- which followed another well-below-forecast read a month ago -- continues to linger, traders are now turning their attention to the central bank decision on September 18.
Having slashed rates in the early months of the pandemic, the Fed began hiking in 2022 as inflation started to take hold, and they kept lifting for a year until rates hit a two-decade high.
Now, with disinflation seemingly kicking in and the labour market softening, decision-makers are tipped to start cutting again, but discussion revolves around whether it will go for a 25 or 50 basis point move.
Figures on Thursday showed wholesale prices rose 0.2 percent in August, putting the benchmark on an annual basis at 1.7 percent, down from a revised 2.1 percent the previous month.
However, when volatile food and energy components were stripped out, they were up 0.3 percent, topping forecasts.
The readings came a day after news that the consumer price index had hit its lowest level since February 2021, but the core reading had risen more than expected from the previous month.
Observers said the data did little to alter the view that borrowing costs would come down but made the case for the bigger move harder.
"With inflation concerns receding and the labour market having rebalanced, the Fed's current stance of monetary policy is too restrictive," said Xiao Cui at Pictet Wealth Management.
"A situation where labour demand is too weak to absorb the temporarily elevated growth in labor supply is a slow-moving issue that the Fed can likely deal with by easing policy."
Confidence that the Fed would cut provided support to Wall Street, particularly the key tech sector, with the Nasdaq up one percent.
And Asia mostly followed suit.
Hong Kong gained more than one percent. E-commerce titan and market heavyweight Alibaba was a key driver of the gains, building on this week's rally as mainland Chinese investors snapped it up after it was included Tuesday in a programme that allows them to buy stocks in Hong Kong-listed firms.
Sydney, Singapore, Taipei, Manila, Bangkok and Jakarta were also well in the green, though Shanghai, Seoul and Wellington struggled.
Tokyo was also down, weighed by a stronger yen, which was hovering just above the 141 per dollar mark last touched at the end of December on bets the Fed will ease monetary policy.
The Japanese unit has rallied strongly since touching almost 162 touched in July, which caused authorities to intervene and spend billions to prop it up.
Expectations that the Bank of Japan will hike rates for a third time this year have also provided a big boost to the currency, while decision-makers have suggested they will keep lifting if the economy and inflation act as forecast.
Daiwa Securities said "staunch speculation over the Bank of Japan's additional rate hikes prompted (the dollar) to fall".
The BoJ is seen standing pat on rates at its meeting next week but investors are keeping a close eye on deliberations after it announced a surprise lift at its last gathering, sparking turmoil in markets.
Tokyo - Nikkei 225: DOWN 0.9 percent at 36,507.10 (break)
Hong Kong - Hang Seng Index: UP 1.1 percent at 17,423.68
Shanghai - Composite: DOWN 0.2 percent at 2,712.52
Dollar/yen: DOWN at 141.06 yen from 141.78 yen on Thursday
Euro/dollar: UP at $1.1086 from $1.1078
Pound/dollar: UP at $1.3147 from $1.3126
Euro/pound: DOWN at 84.34 pence from 84.36 pence
West Texas Intermediate: UP 0.4 percent at $69.26 per barrel
Brent North Sea Crude: UP 0.3 percent at $72.21 per barrel
New York - Dow: UP 0.6 percent at 41,096.77 (close)
London - FTSE 100: UP 0.6 percent at 8,240.97 (close)
dan/lb