LONDON, TOKYO, Jan 6 Reuters Global equities were set to end the first week of 2023 on a tepid note and the dollar stood tall as fears of higher U.S. interest rates hit market sentiment.

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 onemonth high against major currencies on Friday as investors braced for the crucial U.S. nonfarm 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 Feds determination to prevent a doom loop of rising wages and prices that would embed high inflation in the worlds 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 nonfarm payrolls report is expected to show on Friday that 200,000 jobs were created in December, easing from November39;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 Feds focus on wage inflation while there was little doubting the still strong labour market.

U.S. twoyear Treasury yields , which track interest rate expectations, spiked to a more than twomonth high of 4.497 overnight before…