As U.S. markets were closed Thursday for the July 4 holiday, Asian traders took their cues from Europe where the BoE and ECB kept benchmark rates unchanged, but indicated that monetary policy would remain accommodative. This sparked the biggest one-day jump in European shares in ten weeks.
"It was central bank independence day, fourth of July. The ECB and BoE made a very strong statement and the statement is this: A rise in yields in Europe is unwelcome, we've got to start giving forward financial guidance to financial markets that this is what we're going to expect," said Robert Rennie, global head of currency strategy at Westpac Bank.
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Investors awaited June U.S. non-farm payrolls figure, due for release when U.S. markets re-open on Friday. Economists surveyed by Reuters expect a gain of 165,000 jobs, lower than May's 175,000 figure. The data could shape market expectations for when the Federal Reserve will begin tapering off its $85 billion monthly bond-buying stimulus program.
"We haven't really seen a huge amount of cautious positioning expressed in Asia around non-farm payrolls," said Chris Weston, market strategist at IG in a note.
Nikkei Rallies 2%
A weaker currency supported Japanese exporters after the dollar rose back above the 100-yen level, helping the index cross the 14,165 mark to its highest levels since May 29. Optical fiber maker Furukawa and steel producer Kobe Steel added 7.5 and 6.7 percent, respectively.
"Textbook theory would suggest that USD/JPY is the best guide on the market's interpretation of the U.S jobs number. However, in recent times USD/JPY seems to have adopted the mantra as the cleanest 'risk on, risk off' trade out there, so there's a possibility we could see it actually fall on a number above consensus," Weston added.
A record first-quarter net profit from convenience store chain Seven & I Holdings sparked a rally across retailers. Shares rose 1.3 percent while Fast Retailing climbed 3 percent. Traders say that the results indicate that luxury firms are not the only beneficiaries of the wealth effect created by equity market gains. Sentiment is also improving generally as a result of Prime Minister Shinzo Abe's stimulus policies.
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