Investors are eagerly awaiting the release of key US inflation data, which could have an impact on the Federal Reserve's decision-making on interest rates
Investors are eagerly awaiting the release of key US inflation data, which could have an impact on the Federal Reserve's decision-making on interest rates AFP

The yen extended losses to a fresh 38-year low Friday, putting investors on guard for a possible intervention by Japanese authorities ahead of the release of key US inflation data later in the day.

Asian equity markets advanced following a positive lead from Wall Street, though there is speculation of a possible pull-back on profit-taking and concerns the recent tech-fuelled rally may have run too far.

Traders took the Japanese unit to as much as 161.27 per dollar as they pushed the envelope with officials in Tokyo, who stepped into forex markets twice in April and May after the yen tumbled.

However, while vice finance minister Masato Kanda said this week that the government was ready to act 24 hours a day, analysts said authorities were more concerned about the pace of the movements rather than any particular red line.

On Thursday, finance minister Shunichi Suzuki added that "we have strong concerns" about the yen's weakness and "necessary measures" would be taken if needed.

But Luca Santos, at ACY Securities, said: "While these verbal interventions may temporarily slow the yen's decline, they must be backed by direct market intervention to be effective.

"However, the success of such measures remains uncertain, considering previous efforts in late April and early May took about two months to counteract losses before the (dollar) surged to new highs this week."

Commentators say Japan is unlikely to move before the release later Friday of the personal consumption expenditures (PCE) index reading -- the Federal Reserve's preferred gauge of inflation that could determine its plans for interest rates.

The report is tipped to show a further slowdown in prices, though there is a fear that a forecast-busting reading could dent hopes for a cut this year, while a lower-than-expected figure could ramp up bets for more than one before January.

There was some hope for a softer number after data Thursday showed a pick-up in continuing jobless claims, a slowdown in personal consumption and an economy still in rude health.

Fed officials have tried to temper rate cut expectations, warning they wanted to see more evidence that inflation was being brought under control.

On Thursday, the bank's Atlanta boss Raphael Bostic said he saw one reduction this year.

Asian equity markets were on course to end a choppy week on a positive note, tracking gains on Wall Street, with investors also keeping an eye on the election debate between US President Joe Biden and his predecessor Donald Trump.

Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta were all in the green.

France's weekend first-round legislative polls were also in view, with President Emmanuel Macron's centrist alliance facing defeat to a surging far right, whose spending plans could put Paris on course for a standoff with the European Union.

That is followed by the general election in the United Kingdom on Thursday, which is expected to see the ruling Conservatives of Prime Minister Rishi Sunak ousted after 14 years in government and replaced by the opposition Labour Party.

Dollar/yen: UP at 161.09 yen from 160.79 yen on Thursday

Tokyo - Nikkei 225: UP 1.0 percent at 39,727.91 (break)

Hong Kong - Hang Seng Index: UP 0.7 percent at 17,834.71

Shanghai - Composite: UP 0.7 percent at 2,967.12

Euro/dollar: DOWN at $1.0691 from $1.0707

Euro/pound: DOWN at 84.65 pence from 84.67 pence

Pound/dollar: DOWN at $1.2627 from $1.2642

West Texas Intermediate: UP 0.4 percent at $82.09 per barrel

Brent North Sea Crude: UP 0.4 percent at $86.73 per barrel

New York - Dow: UP 0.1 percent at 39,164.06 (close)

London - FTSE 100: DOWN 0.6 percent at 8,179.68 (close)