By Rae Wee

SINGAPORE (Reuters) - The yen swung between losses and gains on Friday in volatile trade, reflecting investors' skittishness after Tokyo was thought to have intervened to prop up the Japanese currency in the wake of a cooler-than-expected U.S. inflation report.

Moves in the yen against the dollar and other major currencies stole the spotlight on Friday, though in the broader market, Asian stocks cheered the growing bets for a September rate cut from the Federal Reserve.

The dollar was last 0.05% lower at 158.79 yen, after having risen more than 0.3% to an intraday high of 159.45 yen and falling 0.7% to a low of 157.75 yen within the span of the early Asian session on Friday.

Moves were similarly choppy in the other yen crosses, with the euro last up 0.02% against the yen while sterling rose 0.1%, both reversing earlier losses against the Japanese currency.

"It's either one of two things - the market's either jumping at shadows this morning waiting for a second round of intervention, and I think now that the (Bank of Japan) has committed again, there's good reason for them to come back," said Tony Sycamore, a market analyst at IG.

"The second thought is the market's just really skittish."

Speculation was rife that Japanese authorities had likely intervened in the currency market to shore up the yen on Thursday, after it surged nearly 3% against the dollar intraday.

Local media attributed the move to a round of official buying from Tokyo to prop up a currency that has languished at 38-year lows, though authorities as usual remained reticent on providing any hints.

The Nikkei newspaper reported that the BOJ conducted rate checks with banks on the euro against the yen on Friday, citing several sources.

ON TRACK

Elsewhere, MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, though was on track for a 1.6% increase for the week, helped by growing bets of imminent U.S. rate cuts.

Those expectations were reinforced after Thursday's U.S. consumer price figures and as Fed officials showed increasing confidence that inflation was coming to heel.

Market pricing now shows an over 90% chance of a Fed easing cycle beginning in September, as compared to just over a 50% chance a month ago, according to the CME FedWatch tool.

"While the timing of eventual Fed rate cuts will depend on incoming data, this report, together with some softening in the labor market, has further tilted the balance of evidence towards an earlier start time," said David Doyle, head of economics at Macquarie.

However, Asian stocks failed to rally on Friday as they tracked a negative lead from Wall Street, after investors rotated into smaller companies following the U.S. inflation print.

"The broad move was driven by rotation and switching across styles and factors," said Chris Weston, head of research at Pepperstone. "It was the well-loved names that saw the selling and maybe this was partly technical given just how extended these plays are."

Japan's Nikkei similarly fell 2.3%, dragged down by technology stocks.

S&P 500 futures were little changed, while Nasdaq futures fell 0.02% and EUROSTOXX 50 futures were flat.

In other currencies, sterling eased 0.03% to $1.29095, though hovered near a roughly one-year high hit on Thursday, as comments from Bank of England policymakers and better-than-forecast GDP data led traders to reduce bets on an August rate cut in Britain.

The euro gained 0.04% to $1.0871, while the U.S. dollar was on the defensive and languished near a one-month low against a basket of currencies from the previous session.

Oil prices meanwhile rose in early Asian trading hours on Friday as signs of strong summer demand and easing inflationary pressures in the United States bolstered investor confidence. [O/R]

Brent futures rose 0.4% to $85.74 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.56% to $83.08 a barrel.

Gold edged 0.07% lower to $2,413 an ounce. [GOL/]

By Alexandra Alper and Christopher Bing

WASHINGTON (Reuters) -Republican lawmakers asked the Biden administration for an intelligence assessment of Microsoft (NASDAQ:MSFT)'s $1.5 billion investment in UAE-based artificial intelligence firm G42 over concerns about transfer of sensitive technology and G42's historic ties to China.

Representative Michael McCaul, chair of the House Foreign Affairs Committee, and John Moolenaar, leader of the Select Committee on China, made the request for a briefing in a letter dated Wednesday to White House national security adviser Jake Sullivan, the committees said.

The Republicans said they want the briefing on the deal, announced in April, before it advances to a second phase involving the transfer of export-restricted semiconductor chips and model weights, sophisticated data that improves an AI model's ability to emulate human reasoning.

The letter is a sign of growing concern about the lack of regulations around the export of sensitive AI models, as fears mount that companies like G42 might share the prized technology with U.S. adversaries like China.

"We remain deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive, U.S.-origin technology, without congressional consultation or clearly defined regulations in place," the lawmakers said in the letter.

They asked for a U.S. assessment of G42's ties to China's Communist Party, military and government before the Microsoft deal advances. They cited a recent visit by UAE President Sheikh Mohamed bin Zayed Al Nahyan to Beijing to discuss, according to Chinese state news agency Xinhua, cooperation in AI.

Microsoft said in a statement it was working closely with the U.S. government and "U.S. national security will continue to be a principal priority." The White House National Security Council spokesperson said in a statement that the administration has been in regular dialogue with lawmakers to ensure they are aware of the risks associated with digital infrastructure. "National Security Advisor Jake Sullivan looks forward to continuing this engagement, including with Chair McCaul," the person added.

Spokespeople for G42 and the United Arab Emirates embassy did not respond to requests for comment.

The Chinese Embassy said, "The U.S. has repeatedly undermined cooperation between Chinese companies and other countries on trumped-up security grounds."

CONCERNS ABOUT CHINA

A House Select Committee aide told reporters on a phone call on Thursday that based on conversations with Microsoft, the lawmakers expect the U.S. company to export otherwise severely restricted AI semiconductor chips to train models as well as AI model weights.

Microsoft President Brad Smith told Reuters in May that the deal with G42 could eventually involve the transfer of sophisticated chips and tools.

The Republicans' letter also cited G42's past "digital surveillance" work as an area of possible risk. The aide highlighted prior connections between G42 staff and Emirati cybersecurity firm DarkMatter, which was the subject of a 2019 Reuters investigation on its cyber espionage activities.

The U.S. has had deepening concerns about China's influence in the Middle East and the United Arab Emirates, a longstanding U.S. ally.

But G42 said in February it divested its investments in China and was accepting constraints imposed on it by the United States to work with U.S. companies. G42 previously had investments or partnerships in China with TikTok owner ByteDance, vaccine developer Sinopharm and U.S.-blacklisted biotech firm BGO Genomics.

The New York Times reported in April that the Microsoft deal with G42 was largely orchestrated by the Biden administration to box out China. Commerce Secretary Gina Raimondo told the paper that the Microsoft deal did not authorize the transfer to G42 of AI models or processors to develop AI applications.

Along with Microsoft, Abu Dhabi sovereign wealth fund Mubadala, the country's ruling family and U.S. private equity firm Silver Lake hold stakes in G42, whose chairman, Sheikh Tahnoon bin Zayed Al Nahyan, is the UAE national security adviser and a brother to the president.

Reuters reported in May that the Commerce Department was considering rules to restrict the export of proprietary or closed-source AI. Currently, nothing is stopping U.S. AI giants from selling them to almost anyone in the world without government oversight.

BANGKOK (Reuters) - The Thai government's flagship 500 billion baht ($13.8 billion) "digital wallet" handout scheme will spur job creation and stimulate underdeveloped provinces and regions, Prime Minister Srettha Thavisin said on Thursday.

Some minor changes to the policy reflect public opinion, he said in a speech to parliament, adding the government planned to announce all the details of the policy on July 24.

"The capital injection will help spur manufacturing and create jobs," Srettha told lawmakers.

The scheme, which would see about 50 million Thais receive 10,000 baht each to spend locally within six months, is slated to start in the fourth quarter but the government has struggled to find sources of funding.

Srettha did not mention the total budget cost of the policy in his speech. On Wednesday, a deputy finance minister said that based on past experience there might be a take-up rate of about 90%, which meant the scheme could cost around 450 billion baht.

Two former central bank governors and economists have criticised the plan as fiscally irresponsible, but the government has rejected those arguments.

"You are able to diagnose the issues, but the solution is unclear," said opposition lawmaker Sirikanya Tansakul in response to the Prime Minister's speech.

($1 = 36.2500 baht)

JAKARTA (Reuters) - Indonesian President-elect Prabowo Subianto will allow the nation's debt-to-GDP ratio to rise to 50% provided his administration can boost tax revenues, the Financial Times reported citing one of his closest advisers.

Prabowo's brother and adviser Hashim Djojohadikusumo told the Financial Times in a London interview that Indonesia could still retain its investment-grade rating even if the debt-to-GDP ratio rises to 50%.

"The idea is to raise the revenue and raise the debt level," Hashim said in the article.

"We don't want to raise the debt level without raising revenue," Hashim said, pointing to "taxes, excise taxes, royalties from mining and import duties".

Prabowo's economic team in Jakarta declined to comment on the interview when contacted by Reuters on Thursday.

His team had previously denied a media report that Prabowo planned to increase debt-to-GDP levels from under 40% to 50%. They said at the time the incoming president would continue to abide by existing fiscal rules.

Under those rules, the government's budget deficit is capped at 3% of GDP and the debt-to-GDP ratio cannot exceed 60%.

Concerns about Prabowo's borrowing plans weighed on bond prices and the rupiah last month, helping knock the currency to four-year lows against the dollar.

During campaigning, Prabowo had said he wanted to raise public debt levels, while also pledging to boost the tax-to-GDP ratio to 16% from around 10% now. He will take office in October.

Earlier this week Tempo magazine reported Prabowo had formed a team to explore ways to remove the fiscal deficit and debt-to-GDP ratio ceilings to fund his campaign pledges. His adviser for fiscal matters told Reuters he was not aware of any discussion to remove fiscal gap and debt ceilings.

By Tom Westbrook

SINGAPORE (Reuters) - Stocks rose on Thursday, with markets from Tokyo to New York at record highs, while traders counted down to U.S. data that is expected to show inflation easing and pave the way for rate cuts in September.

Bonds and the dollar were steady, keeping the yen on the weak side of 161 per dollar and near its lowest levels in decades.

Gains in heavyweight technology shares sent the S&P 500 up 1% overnight to a sixth consecutive record closing high, and in Asia, Japan's Nikkei rose 1% to a record high at 42,426. (T)

MSCI's broadest index of Asia-Pacific shares outside Japan also gained 1% to a two-year high. Taiwan stocks hit a record peak and Australia's ASX 200 was within a whisker of its all-time top.

"The main driver is really the prospect of interest rate cuts," said Shane Oliver, chief economist and head of investment strategy at AMP (OTC:AMLTF) in Sydney. "If we get a good inflation read, it will tick one of Powell's boxes."

U.S. Federal Reserve Chair Jerome Powell told lawmakers on Capitol Hill overnight that "more good data" would build the case for the U.S. central bank to cut interest rates. Futures pricing implies about a 75% chance of a cut in September.

Economists forecast annual U.S. CPI slowed to 3.1% in June from 3.3% in May.

The Bank of Korea stood pat on interest rates and Governor Rhee Chang-yong told reporters that it was time to prepare to pivot to rate cuts.

A shift in tone at the Reserve Bank of New Zealand on Wednesday led to a sharp re-pricing in rate-cut expectations, with the benchmark two-year swap rate diving 18 basis points and the currency sliding.

Malaysia is expected to hold rates steady later in the day, and the U.S. earnings season will also begin with results from Delta Air Lines (NYSE:DAL) and consumer bellwether PepsiCo (NASDAQ:PEP), followed by bank results on Friday.

CHINA LAGGING

China stocks chimed with the market momentum on Thursday, but a drumbeat of disappointing data and talk of tariffs in its major export markets have made rallies hard to sustain. China GDP print is due on Monday.

Hong Kong's Hang Seng rose 1%, and on the mainland, the blue-chip CSI300 climbed 0.4% although it remains huddled pretty close to Tuesday's four-and-a-half-month low. [.HK][.SS]

China's yuan steadied at 7.2738 per dollar, barely stronger than an almost eight-month low made on Wednesday. [CNY/]

Elsewhere, moves were modest ahead of the U.S. CPI release.

The euro ticked higher to $1.0835. Sterling made a one-month high of $1.2854 as Bank of England's chief economist had, overnight, sounded vaguer about the timing of rate cuts than many traders had expected. [FRX/]

The yen hovered at 161.58 per dollar. Data showed Japan core machinery orders unexpectedly down for a second month running, challenging expectations for interest rates to rise.

The New Zealand dollar found support at its 200-day moving average and traded at $0.6095. The Australian dollar rose 0.2% to a six-month high of $0.6763. [AUD/]

Treasuries were steady overnight and in Asia, with U.S. two-year yields holding at 4.62% and benchmark 10-year yields at 4.29%. [US/]

In commodity trade, oil prices edged higher on signals of strong U.S. gasoline demand. Brent futures rose 35 cents, or 0.4%, to $85.43 a barrel. U.S. crude climbed 36 cents, or 0.5%, to $82.47 a barrel. [O/R]

Favourable U.S. weather has wheat futures pressured near two-and-a-half month lows. [GRA/]

Gold crept 0.2% higher to $2,373 an ounce. After a selloff last week, bitcoin has steadied around $58,900.

By Cynthia Kim and Jihoon Lee

SEOUL (Reuters) - The Bank of Korea extended a pause on interest rate for the 12th straight meeting on Thursday, as it continues efforts to tame inflation amid expectations policymakers will soon agree to lower the highest borrowing costs in 15 years.

The benchmark interest rate was held at 3.50% at its policy review, as widely expected by all 40 economists surveyed by Reuters.

Expectations the BOK could cut interest rates in the coming months gained momentum after headline consumer price readings for June released last week showed inflation slowed to an 11-month low of 2.4%, close to its target of 2%.

South Korea's economy is confronting sticky inflation and policymakers are waiting for sufficient evidence that prices are cooling to begin lowering borrowing costs from restrictive levels.

The focus is on Governor Rhee Chang-yong's press conference at 0210 GMT, where the names of any dissenters could be announced. Dissenting votes typically lead to policy changes in subsequent months.

Governor Rhee said on Tuesday the central bank will now consider trade-offs between inflation and financial stability, given that price rises are easing amid a weaker won and rising household debt.

Economists say a wobbly won, down about 7% this year against the dollar, can potentially push back the timetable for interest rate relief, even as political pressure for early rate cuts grows.

"Sluggish economic growth and lower inflation support a near-term rate cut, although policymakers are likely to have concerns about FX and housing market," Oh Suk-tae, an economist at Societe Generale (OTC:SCGLY) said.

"The rise in USD/KRW towards 1,400 and the rebound in Seoul apartment prices should support a wait-and-see stance in monetary policy."

By Noel Randewich and Ankika Biswas

NEW YORK (Reuters) -The Nasdaq and S&P 500 hit record highs on Wednesday fueled by gains in Nvidia (NASDAQ:NVDA) and other Wall Street heavyweights ahead of inflation data and quarterly earnings reports due this week.

It was the fifth straight day of intraday record highs for the S&P 500 and the Nasdaq. The S&P 500 crossed 5,600 for the first time as expectations of an interest-rate cut in September climbed following comments this week by Federal Reserve Chair Jerome Powell.

Powell said in his second day of Congressional testimony that he was not ready to conclude that inflation was moving sustainably down to 2%, although he expressed "some confidence of that".

The Philadelphia semiconductor index jumped 2% to a record high after contract manufacturer Taiwan Semiconductor Manufacturing Co posted strong quarterly revenue.

"TSMC's report supported the AI narrative, so that more than anything else today is a pretty important data point," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.

Micron Technology (NASDAQ:MU) rallied almost 4%, while Nvidia rose 2.3% to a three-week high.

Apple (NASDAQ:AAPL) climbed 1.4% to a record high, lifting its stock market value to almost $3.6 trillion.

Of the 11 S&P 500 sector indexes, 10 rose, led by information technology, up 1.24%, followed by a 0.97% gain in materials.

With just a handful of large-cap stocks fueling Wall Street's rally this year, some investors worry about a potential selloff if those companies' earnings fail to meet high expectations.

The S&P 500 was up 0.69% at 5,615.50 points.

The Nasdaq gained 0.99% to 18,610.88 points, while the Dow Jones Industrial Average was up 0.48% at 39,482.11 points.

U.S. inflation data due this week include the Consumer Price Index on Thursday and the Producer Price Index report on Friday.

Expectations of a 25-basis-point rate cut by September ticked up to 74% from around 70% on Tuesday and 45% a month ago, according to CME's FedWatch.

Second-quarter earnings season, which kicks off this week with major banks reporting on Friday, will test whether high-flying megacaps can justify expensive valuations and extend their strong runs.

Intuit (NASDAQ:INTU) dropped 3% after the TurboTax owner said it plans to lay off about 10% of its workforce.

Gene-sequencing equipment maker Illumina (NASDAQ:ILMN) jumped 6.5% on plans to acquire privately held Fluent (NASDAQ:FLNT) BioSciences.

Advancing issues outnumbered falling ones within the S&P 500 by a 2.3-to-one ratio.

The S&P 500 posted 27 new highs and 10 new lows; the Nasdaq recorded 54 new highs and 104 new lows.

By Shivangi Acharya and Swati Bhat

NEW DELHI/MUMBAI (Reuters) - India's growing employment stems largely from self-employed individuals, unpaid workers and temporary farm hires, whose jobs are not equivalent to formal positions with regular wages, private sector economists said on Wednesday.

The comments follow labour department figures released this week showing 20 million new employment opportunities generated each year since 2017/18, countering a Citibank report that said only 8.8 million jobs were added each year since 2012.

"What is clear is that there is a large increase coming from agriculture and from self-employment, which includes own account work or unpaid family work," said Amit Basole, head of the Centre for Sustainable Employment at the Azim Premji University.

The jump in employment cannot be equated to the creation of formal jobs with regular wages, Basole said, going by detailed data available up to the financial year 2022/23.

In the fiscal year that ended in March 2024, employment in the economy rose by 46.7 million for a total of 643.3 million, up from 596.7 million a year ago, the central bank said in a statement on Monday.

The Reserve Bank of India database showed agricultural work opportunities contributed 48 million of the 100 million jobs generated between financial years 2017/18 and 2022/23, Basole said.

"I wouldn't call them jobs," he added. "They're just people working in agriculture or in non-farm self-employment because of lack of adequate demand for workers from businesses."

While the central bank gave a provisional estimate of the increase in employment in 2023/24, it did not detail the sectors that saw these additions. That data was only available up to the previous year.

The central bank and government did not respond to emails from Reuters seeking comment.

Prime Minister Narendra Modi, whose party lost its absolute parliamentary majority in elections last month, having to turn to allied parties to retain power, first won power in 2014, on a promise of creating 20 million jobs a year.

However, he has since faced criticism from analysts and political rivals for failing to deliver.

"The Modi government's only mission is to make sure youth are jobless," Mallikarjun Kharge, president of the main opposition party Congress said this week, after the Citibank report reignited the jobs debate in India.

Modi's party manifesto for this year's general election promised to create jobs through investments in sectors such as infrastructure, pharmaceuticals and green energy.

But the party's failure to win an absolute majority on its own was blamed on voters' disenchantment with lack of jobs and high inflation.

"Yes, there has been an enormous increase in the number of people who are, quote-unquote, employed," said India's former chief statistician, Pronab Sen. "But the bulk of this increase has come in agriculture and in casual work."

Growing farm employment was "extremely regressive" as it went against the nation's goal of moving more Indians away from agricultural work, he added.

"Look, the question is, do you really believe there's so much employment happening?" Sen said. "It seems unlikely."

The debate over India's employment data was "muddying the water," he added.

Government data shows just 20.9% of India's overall workforce earned regular wages in the form of salary, as of 2022/23.

Economists have pointed to weak consumption in the economy, which grew by just 4% in 2023/24, or half the pace of gross domestic product (GDP) which expanded at a world-beating 8.2%.

"We can have disputes on the numbers but ultimately, what we should go by is the outcome," said Rupa Rege Nitsure, an independent economist.

"If enough employment is being generated, then enough income should get generated and that should get translated into higher consumption at a broad-based level. Why are we seeing so much unevenness in consumption spending?"

By Joe Cash

BEIJING (Reuters) - China's exports likely grew at the fastest pace in fifteen months in June, as manufacturers front-load shipments in anticipation of tariffs from a growing number of the country's major export markets.

Trade data on Friday is expected to show exports grew 8.0% year-on-year by value, according to the median forecast of 31 economists in a Reuters poll, up from the 7.6% increase in May and the best pace since a 10.9% gain in March last year.

Imports likely grew 2.8% last month, faster than the 1.8% gain seen in May, suggesting factory owners are buying more parts to be turned into finished goods for export.

Stronger-than-expected exports have been one of the few bright spots for an economy that is otherwise still struggling for momentum despite officials' efforts to stimulate domestic demand following the pandemic. A prolonged property slump and worries about jobs and wages are weighing heavily on consumer confidence.

The $18.6 trillion dollar economy is so overwhelmingly competitive across so many sectors, including steel, solar and consumer goods, that even new trade restrictions wouldn't really slow the export juggernaut, analysts say.

Still, as the number of countries considering stepping up curbs on Chinese goods increases, so too does the pressure on its exports to prop up progress towards the government's economic growth target for this year of around 5%.

Washington in May hiked tariffs on an array of Chinese imports, including a quadrupling of duties on Chinese electric vehicles to 100%, while Brussels last week confirmed it would also impose tariffs, but only up to 37.6%.

Exporters are also on edge heading into U.S. elections in November in case either major party tips fresh trade restrictions.

Turkey last month also announced it would impose a 40% additional tariff on Chinese-made EVs, while Canada said it was considering curbs.

Meanwhile, Indonesia plans to impose import duties of up to 200% on textile products, which China is its biggest supplier of, India is monitoring cheap Chinese steel, and talks with Saudi Arabia over a free trade agreement have reportedly stalled over dumping concerns.

A global cyclical upturn in the electronics sector should also help exporters in the world's No.2 economy, which is investing heavily in expanding production of older chips, known as legacy chips, that can be found in everything from smartphones to fighter jets.

South Korean exports to China - a leading indicator of China's tech imports - jumped 16.8% last month.

The European Commission has reportedly began canvassing the bloc's semiconductor industry for its views on China's expanded production of legacy chips, which could constrain the Asian giant's strong export performance in electronics.

The median estimate in the poll predicted China's trade surplus will come in at $85.0 billion, up from 82.62 billion in May.

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) -The U.S. is "no longer an overheated economy" with a job market that has cooled from its pandemic-era extremes and in many ways is back where it was before the health crisis, Fed Chair Jerome Powell said in remarks to Congress that suggested the case for interest rate cuts is becoming stronger.

"We are well aware that we now face two-sided risks," and can no longer focus solely on inflation, Powell told the Senate Banking Committee on Tuesday. "The labor market appears to be fully back in balance."

Powell told lawmakers that he did not want "to be sending any signals about the timing of any future actions" on interest rates, a stance consistent with the chair's recent efforts to focus attention more on the evolution of economic data - and the possible choices the Fed might make in response - and less on firm guidance about what might happen on what timetable.

Still, with a Nov. 5 presidential election on the horizon and just two scheduled Fed meetings before it, Powell was quizzed by Democrats about the risks to the job market of not cutting rates soon, and by Republicans about the pain to households of inflation that remains above the central bank's 2% target.

"Any move to lower rates before Nov. 5 would be a bad perception," Senator Kevin Cramer, Republican of North Dakota, said to Powell, said in remarks that went on to pledge support for central bank independence.