U.S. Dollar Mixed in Quiet Trading

The U.S. dollar was mixed in quiet trading Friday ahead of the U.S. jobs report. Some risk-taking is returning to the markets on the back of data this week suggesting that the pace of the slowdown may be moderating. This is lending support to the euro and sterling and weighing on the yen and Swiss franc.

The general consolidative tone that emerged near midweek remains intact. The U.S. employment data is seen by many as the likely signal of the near-term direction, but over the last three months the market's disappointment has not been consistently been reflected or expressed in the dollar's performance.

Global equity markets were finishing the week on a firm note after having suffered in August. The MSCI Asia-Pacific Index advanced about 0.5%, led by the tech sector. The benchmark is up 2.5% on the week. Of note, the 1.8% rise in the Philippine stock index puts it at a three-month high while Indonesia's 1.3% rise is sufficient to put it at a new record high.

European bourses were generally around 0.5% higher. Their ability to hold on to the gains depends heavily on the reaction to the U.S. jobs data. Technology and financials were among the strongest sectors. The FTSE has been the best performing G7 equity market this week, advancing 4.6% as of midday in London. The Nikkei's 1.4% rise puts it at the bottom.

Bond markets were slightly heavier with G7 sovereign 10-year yields mostly 1-2 basis points higher. Japanese government bonds suffered their largest weekly loss in a couple of years. The 10-year yield rose 15 basis points to 1.135%. Peripheral European spreads were mostly quiet.

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