Jamie McGeever

(Reuters) - The outlook for Asian markets for the day ahead.

This week's positive relief from unexpected inflation in the U.S. and U.K. appears to have faded, at least as far as stocks are concerned, even as Treasury yields and the U.S. dollar continued to move lower on the final trading day of the week.

Asian markets opened on Friday against a mixed global backdrop. Yields softened, Federal Reserve Governor Chris Waller again signaled a willingness to cut interest rates on Thursday, while U.S. bank profits topped expectations.

But more evidence is needed that the easing in global bonds and inflation is anything but temporary, and investors are nervous ahead of U.S. President-elect Donald Trump's inauguration on Monday.

So Asian investors could be forgiven for trying to be cautious and minimize their exposure to risk assets ahead of the weekend, especially with markets closed for three days in the U.S. on Monday for Martin Luther King Jr. Day.

But China's monthly "data dump" will be released on Friday. Beijing will release December housing price, industrial production, fixed asset investment and retail sales data, all of which will contribute to fourth-quarter and full-year GDP.

Citigroup's China Economic Surprise Index is currently in the positive range, boosted by a series of policy commitments and market-boosting measures announced since September. But that boost has faded, with the index falling to its lowest in two months.

Can Friday's slew of indicators stop this trend from happening? Some data, such as exports and new lending figures released earlier this week, are likely to be strong as businesses and households increase activity ahead of Trump taking office, threatening tariffs.

On the other hand, broader trends point to a greater likelihood of negative surprises, with December marked by massive capital outflows, subdued equity markets and the largest drop in bond yields since December 2008.

Investors will also be watching the TikTok incident closely for signs of how cold U.S.-China relations may be before Trump returns to the White House.

The Chinese-owned video app, used by more than 170 million Americans every month, will be banned on Sunday under a law that requires it to find a non-Chinese owner. But Trump's incoming national security adviser said on Thursday that the new administration would keep TikTok in the United States if a workable deal was reached, potentially giving the company some breathing room.

Meanwhile, Asian currency volatility increased after two surprise policy announcements this week from the central banks of South Korea and Indonesia, and the yen rebounded strongly ahead of a possible rate hike by the Bank of Japan next week.

The story continues