Asian stocks are set to snap a two-week losing streak on Friday after major central banks kick-started their rate easing cycle this week, adding to expectations the US Federal Reserve could soon follow suit.

The European Central Bank (ECB) delivered a well-telegraphed rate cut on Thursday, a day after the Bank of Canada became the first G7 nation to trim its key policy rate.

The two join Sweden’s Riksbank and the Swiss National Bank in beginning their respective monetary easing cycles, breathing new life into the global risk rally and as bets grow that the Fed could also cut rates in September.

“You’ve got two of the G7 cutting rates … it certainly opens the door further to the Fed,” said Tony Sycamore, a market analyst at IG. “We’re not in the home straight, but we’ve certainly rounded the corner.

MSCI’s broadest index of Asia-Pacific shares outside Japan tracked world stocks higher and rose 0.3 per cent in early Asia trade. The index was headed for a weekly gain of nearly 3.0 per cent.

Hong Kong’s Hang Seng Index similarly ticked up 0.14 per cent, while Chinese blue chips edged 0.23 per cent higher. Japan’s Nikkei fell 0.16 per cent.

Market moves were largely subdued as traders stayed on guard ahead of Friday’s US nonfarm payrolls report, where expectations are for the world’s largest economy to have added 185,000 jobs in May.

“If we did get a little softer data tonight … We could see 10-year Treasury yields pushing down towards the 4.0 per cent level,” said Rob Carnell, ING’s regional head of research for Asia-Pacific.

“Equities, in all likelihood, would rally strongly on that, and that would reflect across the region. You’ll likely see the dollar losing a little bit of strength from that.”

The benchmark 10-year US Treasury yield was last firm at 4.2987 per cent, while the two-year yield rose about two basis points to 4.7386 per cent, after having clocked six straight sessions of declines.

The decline in yields has come on the back of renewed expectations of imminent Fed rate cuts, following a slew of data this week which pointed to an easing of labour market conditions in the United States.

Markets are now pricing in roughly 50 basis points of easing from the Fed this year.

Elsewhere, the dollar languished near an eight-week low against a basket of currencies, and was headed for a weekly-loss of about 0.5 per cent.

The euro rose 0.05 per cent to $US1.0895 ($A1.6339), extending its slight gain from the previous session as the ECB raised its inflation forecasts and kept investors in the dark over how soon subsequent rate cuts could come.

“The ECB nudged up its projections for core and headline inflation … This implies that policymakers might feel slightly less inclined to cut interest rates further,” said Andrew Kenningham, chief Europe economist at Capital Economics. “Changes to the policy statement were also slightly hawkish.”

Against the dollar, the yen fell 0.1 per cent to 155.79, but was headed for a weekly gain of nearly 1.0 per cent.

Japanese household spending rose for the first time in 14 months in April from a year earlier, data showed on Friday, although the tepid growth showed consumers remained reluctant to loosen their purse strings in the face of higher prices.

In commodities, oil prices eased slightly, with Brent crude futures down 0.09 per cent to $US79.80 ($A119.67) a barrel while US West Texas Intermediate crude futures dipped 0.1 per cent to $US75.48 ($A113.20) per barrel.

Spot gold fell 0.2 per cent to $US2,370.82 ($A3,555.45) an ounce.

This post was originally published on Michael West.