US stocks and an index of the dollar fell ahead of jobs data due Friday that will help determine the size of a Federal Reserve rate cut this month.

In Asia, equity futures for Japan rose, as the yen stabilized after a rally this week, while contracts for benchmarks in Australia and Hong Kong were little changed. The S&P 500 ended Thursday 0.3% lower, while the tech-heavy Nasdaq 100 was flat.

Treasury yields were fractionally lower Thursday, with the 10-year yield falling three basis points to add downward pressure on the greenback. The Bloomberg dollar index, which tracks the US currency against a basket of peers, fell 0.2% Thursday.

The muted moves come ahead of a nonfarm payroll report that will cast fresh light on the health of the US jobs market. Traders are still pricing in over 100 basis points of easing this year, implying a potential super-sized reduction. Given Jerome Powell’s recent emphasis on the labor market, many on Wall Street say payrolls will dictate whether the central bank cuts by 25 or 50 basis points this month.

“The danger in really ‘bad news’ is that even if the Fed is prepared to react aggressively, it might be too late to stave off real economic weakness,” Steve Sosnick at Interactive Brokers said. “But there is a worry that if the news is ‘too good,’ the Fed might be reticent to cut rates as fast as the market has come to expect.”

Elsewhere in Asia, China may be facing new export controls on critical technologies by the Biden administration as Washington cracks down on China’s ability to access cutting-edge technologies needed for artificial intelligence, over fears that advanced chips and components could lend Beijing a military edge. 

Markets will also be keeping a close eye on China’s bond market as some government debt the central bank bought recently is now being sold in the secondary market, according to traders - a possible sign that authorities are once again intervening to curb a debt rally.

Meanwhile, Thailand’s parliament passed a 3.75 trillion baht ($111 billion) budget allowing newly-appointed Prime Minister Paetongtarn Shinawatra to lift state spending to accelerate the nation’s economic recovery. 

  - Bloomberg