The yen surged on Friday but Asian markets were directionless, as investors remained nervous ahead of U.S. employment data that might determine the extent and pace of impending rate reduction in the largest economy in the world.

The payroll data, which is coming later today, will determine the short-term fate of oil prices, which are heading into their worst week in over a year and hovering just over a significant chart line.

Federal Reserve Chair Jerome Powell stated that policymakers do not welcome any further deterioration of the labour market, setting the stage for impending rate decreases. This means that a lot is riding on the U.S. non-farm payrolls data.

Analysts predict that the number of new jobs will increase by 160,000 and that the unemployment rate will fall to 4.2%. However, a string of softer partials in recent times indicates that risks are to the downside, which has stoked rumours of an excessive half-point rate decrease on September 18.

According to ING, markets may reduce the likelihood of a 50 basis point cut even if the payrolls meet forecasts.

The broadest MSCI index of Asia-Pacific stocks outside of Japan increased by 0.2%, pointing to a 2.8% weekly decline. With a 1.1% increase, Taiwanese stocks beat Chinese blue-chips on the day, which dropped 0.4%.

As the yen surged, the Nikkei fell 0.7%, which negatively impacted the forecast for Japanese exports. This week, the index is down almost 4%.

The weekly gain for the Japanese yen is now 2.5% after rising 0.6% against the dollar. But, those gains might be erased by strong payroll data.

(Sources: investing.com, reuters.com)