- U.S. stocks ended the previous session with mild gains, contributing to a positive market sentiment.
- Treasury yields eased from multi-year highs overnight, indicating a shift in investor sentiment.
- Asian stocks swung between gains and losses on Thursday, influenced by tech volatility.
- Yen strengthened sharply to around 157.6 per dollar following hawkish comments from BOJ's Takata.
- Markets are now pricing in a near-full chance of a September BOJ hike.
- U.S. stock futures added 0.06% in early European trading, reflecting positive market expectations.
- Attention is now focused on Friday's U.S. payrolls report after disappointing ADP data.
- Fed's Williams tempered expectations of a hike this month, with Waller due to speak.
Stocks and bonds experienced a relief rally in Asia on Thursday, driven by anticipation of U.S. payroll data and comments from the Federal Reserve.
The yen surged to 157.64 per dollar, its strongest level since August 10, as traders priced in a 62% chance of a rate hike this month, up from 37% a week ago, according to CME Group's FedWatch tool.
The rally was bolstered by hawkish remarks from Bank of Japan board member Hajime Takata, who advocated for a more aggressive approach to rate increases to combat inflation.
In early European trading, the pan-region Euro Stoxx 50 futures edged up 0.06%, while U.S. stock futures, including the S&P 500 e-minis, added 0.06%.6
The dollar index fell 0.21% to 99.39, and U.S. Treasury yields eased from multi-year highs, with the yield on benchmark 10-year notes falling 1.79 basis points to 4.776%.2
Oil prices also dipped, with U.S. crude down 0.43% to $90.62 a barrel, amid concerns over renewed military tensions between the U.S. and Iran.
Attention now turns to Friday’s U.S. jobs report, which is expected to provide further insights into the Fed's policy direction.
“Traders now assign a 62% chance of a 25-basis-point Fed rate hike this month, up from 37% a week ago, per CME FedWatch. Meanwhile, Japan's services sector expanded at its fastest pace in five months, reinforcing expectations of a September BOJ hike.”
