Asia stocks rise, dollar stays near five-week lows

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2%

Asian stocks edged higher while the dollar stayed near five-week lows, as investors prepared for a slew of economic data this week.

This includes Friday’s U.S. nonfarm payrolls report, which will be preceded by data on job openings and private payrolls, providing investors and that country’s central bank a clearer picture of the labour market that has become the centre of policy debate.

While an outsized 50 bps rate cut in September is not the base case expectation currently, it cannot be ruled out altogether if the August jobs data shows exceptional weakness, said Vasu Menon, MD of investment strategy at OCBC Bank.

This is what the Fed did in September last year after employment growth slowed down sharply between June and August 2024. However, the difference this time around is that the Fed is also concerned that tariffs may fuel inflation, Menon added.

The U.S. inflation report for August is scheduled to be released on September 11, a week before the central bank’s policy meeting.

The prospect of lower borrowing costs has kept the U.S. stock market near record highs, while stocks in other major economies have also gained in recent weeks. On Tuesday, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2%.

Nikkei added 0.39% after declining more than 1% on Monday.

The currency market also made a weak start to Tuesday with the euro at $1.1706, while sterling hovered near two-week highs at $1.3535. The yen fetched 147.31 per dollar ahead of a crucial Japanese government bond auction.

The dollar index, which measures the U.S. currency against six others, was at 97.717, hovering near the five-week low it hit on Monday. The yield on benchmark U.S. 10-year notes was 2.6 basis points higher at 4.251% in early Asian hours.