Emerging market stocks and currencies rose as investors reduced bets on a Federal Reserve interest-rate hike this month, sending the dollar lower. MSCI’s emerging market stock index jumped as much as 1.1%, its biggest gain in more than a week, while a similar currency gauge rose 0.2%. Treasuries advanced after Fed Governor Christopher Waller said he would favor keeping rates unchanged if inflation continues to ease. Market pricing for Fed rate hikes eased after Waller’s comments. Swap contracts tied to the Sept. 16 policy meeting now imply roughly even odds of a quarter-point increase, down from about 70% earlier this week.

Investors are awaiting upcoming US economic data for clues on the Fed’s next steps. "The big test today is US payrolls," said Charu Chanana, chief investment strategist at Saxo Markets. "A strong number could quickly revive Fed hike expectations, push yields and the dollar higher again, and challenge the EM rally. And of course, we always need to be very sensitive to Iran and oil going into the weekend."

Brent crude futures headed for their biggest weekly gain since July as renewed US-Iran hostilities heightened concerns about prolonged disruptions to energy flows through the Strait of Hormuz.