Investors moved to the sidelines on Friday, with the dollar and world stocks markets barely budging, before U.S. jobs data that are considered a key to convincing the Federal Reserve to raise interest rates for the first time in nearly a decade.Europe opened weaker as a report showed exports in Germany dropped but analysts said that was just a sideshow to U.S. non-farm payrolls data due at 1230 GMT.
Major currency markets steadied with the dollar stuck exactly where it has been since March. The prospect of higher rates has made non-interest-bearing gold less attractive. It was set to record its longest weekly losing streak since 1999 on Friday. Economists expect the U.S. employment report to show 223,000 jobs were created in July. Along with upbeat U.S. economic data and hawkish comments by a Fed official this week, that would support the case for higher rates.
We are currently 40 percent for September and 60 for December because there are still doubts in the corner of the doves, said Philip Marey, an economist at Rabobank. I think if you are going to hike rates for the first time in many years you want show a united front. If they went in September there would probably be quite a few doves voting against it.
In Europe, stocks edged 0.5 percent lower after data showed German exports and industrial output falling in June, a setback that underlined the need for central bank stimulus in the euro zone. Top-rated German bond yields were flat at 0.72 percent.
The prospect of higher U.S. rates has sucked funds out of emerging markets. A slump by Chinese stocks and a rout in commodities has also hurt investor demand.
MSCI broadest index of Asia-Pacific shares outside Japan was down 0.4 percent and set for its third straight weekly loss.Japans Nikkei stock index was up 0.3 percent, erasing earlier losses from investors taking profits after the Bank of Japan kept its stimulus programme unchanged, as expected.
The MSCI world index has advanced 3 percent this year and the MSCI emerging markets index has fallen more than 6.5 percent, as investors have switched their holdings. In currencies, the dollar index was unchanged at 97.81. The euro was also flat $1.0927 early in Europe.
Oil prices, which have dropped to multi-month lows in previous session, steadied on Friday before the U.S. jobs report. The 19-commodity Thomson Reuters Core Commodity CRB Index also hit lows not seen since 2003 with a year-to-date decline of nearly 14 percent.