Tokyo investors will comb through a string of US and Japanese data as well as the European Central Bank's policy meeting next week as they look to get a handle on the state of the global economy, analysts said. The European Central Bank will hold a policy meeting on Thursday, which Nomura Securities "expects will keep the policy rate unchanged".
In the United States, manufacturing data is due on Tuesday and a payrolls report for February will be released on Friday, Nomura noted. In Japan, the labour ministry will Tuesday issue a monthly survey on household incomes for January.
"As income has shown four straight months of increases through December, another rise in salary would underpin further progress towards the exit from deflation," Nomura said. On Friday, Tokyo stocks closed 0.55 percent lower after the yen rose against the dollar in response to Federal Reserve chief Janet Yellen's cautious outlook on the US economy.
The Nikkei-225 index dropped 82.04 points to 14,841.07, while the Topix index of all first-section issues lost 0.47 percent, or 5.69 points, to 1,211.66.
Yellen told the Senate Banking Committee that a severe cold snap was to blame for a disappointing run of economic data over the past two months, including on jobs, industrial output and consumption.
However, she said bank policymakers would keep an eye on the economy to see if the weak figures continue, which could lead to a slower pace of cuts to its stimulus programme.
The comments put pressure on the dollar, as a continuation of the Fed's bond-buying scheme would mean more cash in financial markets.
Each of the Fed's past two policy meetings have seen it cut its bond purchases by $10 billion a month, to a current $65 billion.
The dollar slipped to 101.80 yen in Tokyo afternoon trade from 102.15 yen in New York Thursday afternoon.
"The market is naturally nervous about the Fed remaining steadfast about taking the training wheels off the wobbling economy," said CLSA equity strategist Nicholas Smith, noting Yellen's acknowledgement of signs of softness in the economy.
"Frankly, I don't think she'll take her foot off the brakes (on stimulus) unless the data give her a very strong reason to, however," he told Dow Jones Newswires.
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