Dollar, Yen Eke Out Minor Gains

Major currencies had a pretty steady night, with the yen and dollar eking out minor gains against the majority of their counterparts. USD/JPY traded in very tight ranges, around the 85.20-85.50 yen area. EUR/USD slipped a little, but continued to pivot around $1.28.

Speculation about the possible actions of Japanese authorities died a little, while European Central Bank council member Patrick Honohan described recent economic figures as "stronger." On the week, the growing caution about global growth prospects led to the yen and Swiss franc leading gains among the majors.

Overnight, Sri Lanka unexpectedly cut interest rates by half a point. The Australian central bank deputy governor said the Reserve Bank of Australia has to be careful of inflation as growth continues in coming months. GBP, SEK and DKK lost ground vs the greenback overnight. Emerging market currencies were on the back foot, with declines led by KRW, MYR and ZAR. TRY eked out a small gain after the central bank left rates unchanged. On the week, EM has outperformed, with HUF, PLN and THB all recording gains of 1% or more.

Asian equity markets sold off after the poor news on U.S. jobs and from the Philly Fed, sending the MSCI Asia-Pacific index down for the first session in six. The index dropped 1.3% with Japan's Nikkei down 2%, leading declines in the region. Benchmark indices fell more than 1% in Shanghai, Shenzhen and Australia and there were milder losses in Hong Kong, Korea and India. European markets were up slightly while futures on the U.S. indices are trading higher.

Bonds were steady. Japanese debt was mostly unchanged overnight, with the benchmark 10-year yield at 0.92%. U.S. Treasuries were little changed, with the two- and 10-year yields at 0.48% and 2.57%, respectively. European debt slipped a touch, with the benchmark 10-year bund yield up 1 basis point to 2.31%. Spanish yields were unchanged at 4% while Italy's 10-year yield was up 1 basis point to 3.76%.

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