MUMBAI (Reuters) - The Indian rupee is likely to take cues from its Asian peers, while government bonds will eye movement in Treasury yields after U.S. economic data raised investor expectations that the Federal Reserve would cut policy rates twice this year.

The rupee closed marginally higher at 83.4225 on Friday. It logged a slight weekly loss compared to most Asian currencies, which rose week-on-week.

U.S. non-farm payrolls on Friday showed that employers added 175,000 jobs last month, below economists' expectations for a 243,000 increase. The U.S. unemployment rate rose to 3.9%, up from 3.8% in March, while wage gains cooled.

The dollar slipped to a near one-month low, while the U.S. bond yields dipped after the data as investors raised bets that the Fed would cut rates twice this year, with 48 basis points of easing priced in, up from 42 basis points before the data.

"The coming week can see some appreciation in rupee towards 83.15-20 levels with a key eye on Asian currency movement," Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group said.

Meanwhile, the 10-year Indian government bond yield ended at 7.1470% on Friday, down one basis point for the week, its second consecutive decline.

Traders expect the benchmark bond yield to move in a 7.108%-7.20% range this week, with major focus on movements in U.S. Treasury yields and activity from foreign investors.

In the absence of any major domestic fundamentals, the market will keep an eye on activity from foreign players, which could provide a strong directional trigger.

Foreign investors posted their biggest monthly sale of Indian government bonds in April, the highest in four years, but some investors see this as an aberration and expect inflows to resume in the coming months.

These investors have sold nearly $2 billion of government bonds on a net basis in the first five weeks of this financial year, starting April, according to data.

"We think that the positive sentiment towards India's bond market can be sustained, and we can potentially see resumption of inflows into the markets once the global rates environment has stabilised," said Edward Ng, senior portfolio manager, Asian fixed income, at Nikko Asset Management.

Oil prices also boosted sentiment, cooling off from recent highs as worries over the escalation Middle East tensions have eased.

The surprise announcement from the government to buyback 400 billion rupees worth of securities this week will further boost buying, investors said.

KEY EVENTS: ** HSBC India April services PMI data - May 6, Monday (10:30 a.m. IST)

** U.S. initial weekly jobless claims week to April 29 - May 9, Thursday (6:00 p.m. IST) ** India March industrial production data - May 10, Friday (5:30 p.m. IST)

** U.S. May U Mich sentiment prelim - May 10, Friday (7:30 p.m. IST)

(Reporting by Dharamraj Dhutia and Jaspreet Kalra; Editing by Sonia Cheema)

By Dharamraj Dhutia and Jaspreet Kalra