Asia closed the week firmer on paredback Fed-hike bets, but Monday's US Labor Day holiday means the real test for the hawkish repricing only arrives with Tuesday's return of full US flow.
Nikkei snapped a four-day slide, jumping over a point Friday to close near 65,000 after Fed Governor Waller signaled comfort holding rates if inflation keeps cooling, unwinding some hike bets. BOJ's Ueda and Takata pushed the other way, floating back-to-back hikes this month, pulling USD/JPY down toward the mid-156 handle, well off summer highs above 160. Hang Seng slipped into Thursday's close but held a modest weekly gain as Tencent, Meituan and SenseTime paced a tech bid; CSI 300 stayed choppy on soft domestic demand, and Kospi remains hostage to swings in Samsung and SK Hynix as the regional chip trade whips both ways.
Read-through: US cash is closed Monday for Labor Day, so futures flow is thin and easily pushed around into the open; the real print comes Tuesday. This week's calendar carries the weight — an ECB decision Sept 10, then the make-or-break August CPI on Sept 11, the last read before the Sept 15-16 FOMC. CME pricing now shows roughly 60% odds of a 25bp hike after last week's payroll print blew past estimates, flipping a multi-year cut narrative into live hike risk.
The risk: a hot CPI on Sept 11 cements the hike case, drives yields and the dollar back up, unwinds the yen's recent bid, and reopens the same tech-led air pocket that hit Kospi and Hang Seng into last week's low. A soft print does the opposite and extends Friday's relief rally straight into FOMC week.