Asia follows Wall Street higher, dollar advance slows before jobs report

Asian equities followed Wall Street's gains overnight and edged higher on Friday while the dollar's advance slowed ahead of the US jobs report due later in the session.

The nonfarm payrolls report is the last before the US Federal Reserve's next policy meeting and may influence the timing of the Fed’s rate hike.

MSCI’s broadest index of Asia–Pacific shares outside Japan rose 0.2 per cent. Australian shares added 0.35 per cent and South Korea's KOSPI advanced 0.25 per cent. Japan's Nikkei climbed 0.4 per cent.

Wall Street shares closed higher overnight as investors responded to strong economic data and drew some cautious hope from the Trump administration’s latest promises for long-awaited details of a tax reform plan.

US consumer spending rose slightly less than expected in July and annual inflation advanced at its slowest pace in more than one and a half years, diminishing expectations of an interest rate increase in December.

The dollar’s recent advance slowed as rate hike expectations were dented. The greenback was up 0.15 per cent at 110.130 Yen having gone as high as 110.675 overnight, its strongest in two weeks.

The Euro was steady at $1.1909 after plumbing a one-week low of $1.1823 overnight.

The financial markets looked to the US jobs report due at 1230 GMT for further clues on the state of the world’s largest economy.

Economists polled by Reuters expect US nonfarm payrolls increased by 1,80,000 jobs in August after surging 2,09,000 in July and average hourly earnings to have increased 0.2 per cent after rising 0.3 per cent in July.

“The wages component of the jobs report will be key. If earnings are to have picked up along with employment, we will see a straightforward reaction with US stocks and yields rising and the dollar being bought,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

The dollar index against a basket of six major currencies was a shade lower at 92.629. The index slipped about 0.2 per cent on Thursday and was poised to end 0.1 per cent lower on the week in which it hit a two and a half year low of 91.621 on geopolitical tensions before bouncing back.

In commodities, crude oil prices stood tall after rallying overnight as traders scrambled to reroute millions of barrels of fuel with almost a quarter of US refining capacity remaining offline.

Hurricane Harvey—which brought record flooding to the US oil heartland of Texas—has shut down at least 4.4 million barrels per day of refining capacity, according to company reports and Reuters estimates.

US crude was slightly lower at $47.01 per barrel after surging 2.8 per cent overnight.

Gold hovered near a nine and a half month high, supported as the dollar came off its recent highs and by lingering concerns over tensions in the Korean Peninsula.

Spot gold was steady at $1,321.10 an ounce after gaining 1 per cent overnight. The precious metal was on track to gain 2.4 per cent this week, during which it touched $1,325.93 an ounce on Tuesday, its highest since early November.

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