Asian stocks were poised for their fifth consecutive month of gains on Friday, buoyed by the increasing consensus that cooling inflation in the United States might prompt the Federal Reserve to ease rates later this year.
Friday's market activity is packed with risk events following a relatively calm week. U.S. Democratic President Joe Biden and his Republican challenger Donald Trump are scheduled to take the stage at 0100 GMT for their first debate of the year, ahead of the November U.S. presidential elections.
Chinese markets, in particular, will be closely watching for comments regarding the trade relationship with Beijing, which hasdeteriorated in recent years.
On the economic data front, the U.S. core personal consumption expenditures (PCE) price index for May, the Fed's preferred measure of inflation, is due later on Friday. This data could provide further insights into the U.S. rate outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.06% early in the Asian session, on track for a monthly gain of approximately 3.2%, marking its best performance since February.
Expectations of an imminent Fed easing cycle and momentum from the artificial intelligence boom have fueled a risk rally across stock markets, pushing Wall Street to record highs and subsequently lifting Asian shares.
Traders are now pricing in a 64% chance of a first Fed rate cut in September, up from 50% a month ago, according to the CME FedWatch tool.
Japan's Nikkei climbed 0.78%, recovering some losses from the previous session. It was poised for a monthly gain of 3%, aided by a weak yen and a surge in technology stocks.
S&P 500 futures and Nasdaq futures both edged higher, rising 0.18% and 0.3%, respectively.
In currencies, the yen continued to hover near a 38-year low at over 160 per dollar, keeping markets vigilant for any intervention from Japanese authorities to support the currency.
The yen was last slightly higher at 160.68 per dollar but was set to lose more than 2% for the month, pressured by significant interest rate differentials between the U.S. and Japan.
"Given that the current depreciation pace is slower than in April, there is no compelling reason for 160 to be a hard threshold," said Vincent Chung, associate portfolio manager for T. Rowe Price's diversified income bond strategy.
"Most expectations suggest intervention might occur if there is a sharp depreciation to 163."
In late April and early May, Tokyo spent 9.79 trillion yen ($60.94 billion) to strengthen the yen by 5% from its 34-year low of 160.245.
Data on Friday showed that core consumer prices in Japan's capital rose 2.1% in June compared to the previous year. This highlights the Bank of Japan's challenge in timing its next interest rate hike, as cost pressures from the weak yen keep inflation above its 2% target while also hurting consumption.
The euro was last 0.04% higher at $1.0707 but was set for a 1.3% monthly decline as the common currency remains weighed down by political turmoil in the bloc, with France's snap election approaching this weekend.
In commodity markets, gold, burdened by a strong dollar, fell 0.14% to $2,324.12 an ounce.
Brent crude oil futures rose 0.24% to $86.60 a barrel, while U.S. West Texas Intermediate crude futures gained 0.29% to $81.97 per barrel.
Paraphrasing text from "Reuters" all rights reserved by the original author.
