Asian markets face a cautious start to a pivotal week after a stronger-than-expected August U.S. jobs report boosted expectations of a Federal Reserve rate hike, sapping risk appetite on Friday. A U.S. holiday on Monday may reduce liquidity, while trading is likely to remain subdued ahead of key U.S. inflation data later this week, which could determine whether the Fed hikes rates on September 16. With the regional calendar relatively light, investors are likely to focus on weekend news. China announced a $54 billion capital injection into state banks and insurers, South Korea's exports surpassed last year's annual record, and Iran is set to announce a new restricted zone in the Gulf. Expectations of a 25-basis-point Fed rate hike this month jumped to 58.3% from 49.4% on Thursday, after the robust U.S. jobs report. President Donald Trump's threat to stop trade with some countries unless the Fed cuts rates had little market impact. U.S. crude futures settled 0.2% higher and retail diesel prices hit a record high on renewed U.S.-Iran strikes. Crude is up 0.6% in Asia after the U.S. struck three Iranian vessels on Saturday and Tehran said further attacks will draw a more painful response.

The dollar jumped on Friday after data showed that U.S. employers added 162,000 jobs in August, well above the 56,000 additions expected by economists, boosting bets on a September Federal Reserve interest rate hike.

Treasury yields and the dollar rose, while stocks fell on Friday after stronger-than-expected U.S. job growth data boosted bets on a September interest rate hike by the Federal Reserve.

Gold fell on Friday and was headed for a weekly loss after stronger-than-expected U.S. jobs data boosted expectations that the Federal Reserve could raise interest rates as soon as this month, denting non-yielding bullion's appeal.

U.S. Treasury yields rose on Friday after a surprisingly strong U.S. employment report led investors to increase bets on tighter policy from the Federal Reserve, thought they came off their highs as market participants prepared for inflation data next week.

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