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TOKYO, Oct 25 Reuters The dollar was on the defensive on Friday following its biggest drop in a month against major peers, as it tracked a retreat in U.S. yields from nearly threemonth highs after depressed Treasury prices drew buyers.

Asian stocks were mixed, with some markets tracking Wall Street gains from overnight, while Japan39;s Nikkei dropped 1 after the yen rebounded strongly from a threeweek trough to the dollar and with the coalition government at risk of losing its lower house majority in an election on Sunday.

Hong Kong39;s Hang Seng and a mainland blue chips index each rose about 1. Australian and South Korean stock benchmarks were flat.

For the week though, the dollar was set for a fourth straight weekly rise and the 10year Treasury yield for a sixth, driven by a run of robust U.S. economic data that signals a very patient approach to Federal Reserve interest rate cuts.

Surging bond yields have spooked stock investors, putting the MSCI world equities index on track for a 1.2 slide this week.

Crude oil is set for a weekly advance amid simmering risks to output from the conflict in the Middle East. Safehaven gold is headed for a third winning week.

A parade of potentially pivotal events begin next week…