LONDON, TOKYO: Global equities were set to end the first week of 2023 on a tepid note and the dollar stood tall as fears of higher US interest rates hit market sentiment, according to Reuters. The MSCI World equity index traded steadily on Friday, on course for its fifth consecutive weekly drop despite a brief rally earlier in the week. The dollar also touched a one-month high against major currencies on Friday as investors braced for the crucial US non-farm payrolls report later in the day. The official jobs report comes after private payrolls data on Thursday showed a bigger than expected rise in employment and a drop in jobless claims, underscoring the Fed’s determination to prevent a doom loop of rising wages and prices that would embed high inflation in the world’s dominant economy for longer. Investors have started “to price in a more aggressive path of rate hikes from the Fed,” Deutsche Bank strategist Jim Reid said. According to a Reuters survey of economists, the non-farm payrolls report is expected to show on Friday that 200,000 jobs were created in December, easing from November’s 263,000 pace but still about double the level the Fed considers sustainable. Traders will also zero in on any gains in hourly wages, Reid cautioned, “given the Fed’s focus on wage inflation” while there was “little doubting the still strong labor market.” US two-year Treasury yields, which track interest rate expectations, spiked to a more than two-month high of 4.497 percent overnight before easing to 4.4561 percent in early European trading. The 10-year yield, which rose as high as 3.784 percent in New York overnight, dropped to 3.7088 percent. “There is concern that the labor market isn’t showing any signs of cooling,” putting financial markets “very much on edge,” said Tony Sycamore, a market analyst at IG. The dollar index, which measures the greenback against six counterparts including the yen and euro, stood at 105.24, having earlier touched 105.31 for the first time in a month. The dollar index is up about 1.7 percent this week, putting it on course to snap a streak of three losing weeks. It is shaping up for the best performance since late September. In Europe, the broad Stoxx 600 equity index opened 0.4 percent higher on Friday as falling gas prices combined with mild winter weather boosted hopes for that the region may overcome the worst of its inflation crisis. Germany’s Xetra Dax traded flat. US E-mini stock futures were steady, after a 1.16 percent overnight slide for the S&P 500. The euro was little changed at $1.05255, after earlier easing to $1.0511, a level last seen on Dec. 12.