The dollar gained against the yen after bouncing off a two-week low on Thursday, helped by some firm US economic data, while Japan’s currency was weighed down by political uncertainty amid media reports Prime Minister Shigeru Ishiba will step down.
Benchmark Japanese government bond yields hovered just below the highest since 2008.
Japan’s broad Topix index, which had jumped more than 5% over the previous two sessions to reach an all-time high, pulled back 0.7%. The Nikkei slipped 0.5% from Thursday’s one-year high.
Hong Kong’s Hang Seng lost 0.5% and mainland Chinese blue chips declined 0.2%. Australia’s equity benchmark declined 0.5%.
At the same time, US S&P 500 futures added 0.2%, after the cash index edged up slightly to a new record closing high overnight, buoyed by robust earnings from Google parent Alphabet. The tech-heavy Nasdaq also marked a record high.
MSCI’s gauge of stocks across the globe edged down 0.1%, but remained just below an all-time peak from Thursday. The index is on course for a 1.3% weekly advance, buoyed in large part by optimism for US trade deals with the European Union and China, following an agreement with Japan this week.
Next week, in the US alone, investors need to contend with Trump’s Aug 1 deadline for trade deals, a Federal Reserve policy meeting, the closely watched monthly payrolls report, and earnings from the likes of Amazon, Apple, Meta and Microsoft.
The Bank of Japan has its own policy announcement on Thursday, and Prime Minister Ishiba’s Liberal Democratic Party holds a meeting the same day.
That’s after the European Central Bank held rates steady on Thursday, pausing its easing campaign as it waits to assess any impact from US tariffs.
The euro ended the session down 0.2% against a buoyant dollar, and was little changed on Friday at US$1.1743.
The US currency advanced 0.3% to 147.37 yen, adding to Thursday’s 0.4% gain.
Trump kept the pressure on Fed chair Jerome Powell to cut rates after a rare presidential visit to the central bank on Thursday, although he said he did not intend to fire Powell, as he has frequently suggested he would.
US 10-year Treasury yields edged down to 4.39% on Friday, effectively erasing an advance on Thursday.
Equivalent Japanese government bond yields eased 0.5 basis point to 1.595%, just off this week’s high of 1.6%, a level last seen in October 2008.
JGB yields have been rising on concerns the political scale is tilting more towards fiscal stimulus, after big gains for opposition parties backing consumption tax cuts in Sunday’s upper house election. Pressure is building on the more fiscally hawkish Ishiba to quit after his coalition lost its majority in the vote, after doing the same in lower house elections last October.
Gold was flat at around US$3,368 per ounce, keeping it on course for a 0.5% rise this week.
Brent crude futures gained 0.3% to US$69.35 a barrel, while US West Texas Intermediate crude futures added 0.2% to US$66.18 per barrel.