Asia shares up on policy easing hopes, while yuan slips

Asian shares were slightly higher on Friday on expectations global central banks will soon embark on an easing cycle in the face of international trade frictions and fears of a world recession.

Those concerns blunted some of the optimism, with liquidity light during Asian trading as China and Hong Kong markets were shut for a public holiday.

Japan’s Nikkei ended 0.5% higher, Australia’s benchmark index 0.8% added, and South Korea’s Kospi climbed 0.4%.

In early European trades, the pan-region Euro Stoxx 50 futures were up 0.3%, while German DAX futures rose 0.4 and FTSE futures gained 0.2%.

E-Minis futures for the S&P500 were last up 0.2%, pointing to a positive opening for U.S. markets.

Financial markets are pricing in a 67% chance of a cut by the U.S. Federal Reserve at its July 31 meeting while there is a near 60% chance of a second easing by New Zealand and Australian central banks next month.

In China, central bank chief Yi Gang said there was plenty of room for fiscal and monetary policy easing if the protracted trade war with the United States worsened. Yi signaled the yuan could ease below seven if U.S.-China trade relations turned even more acrimonious.

The remarks sent the dollar 0.2% higher in a thin Asian market to 6.9429. 

As expectations grow for the Fed to lower rates, the dollar index, which measures the greenback against a basket of major currencies, has eased 0.7% this week so far. It was flat at 97.054.

Market forecasts are for jobs to raise a solid 185,000 in May and unemployment to stay at a low 3.6%.