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The US dollar and Treasury yields tumbled on Thursday after President Donald Trump said he preferred the Federal Reserve keep interest rates low as the dollar is getting too strong, and said he would not label China a currency manipulator.
The dollar index, which tracks the greenback against a basket of six trade-weighted peers, plunged 0.7 per cent to 100.07.
Asian stocks swung between gains and losses with MSCI's broadest index of Asia-Pacific shares outside Japan last up about 0.2 per cent.
Japan's Nikkei slumped 1.1 per cent, as investors sought shelter in the yen. Australian stocks retreated 0.75 per cent, on track to post a 0.4 per cent gain for the week.
Most markets in the region will be closed on Friday for the Good Friday public holiday.
Escalating fears of a new weapons test by North Korea also kept investors on edge, as a US carrier group sails towards the area. Foreign journalists visiting the isolated state were told to prepare for a “big and important event” on Thursday.
The tensions around North Korea have sent the cost to protect South Korean government debt against default soaring to 9 1/2-month highs.
But Korean stocks were up more than 0.1 per cent and the Korean won was steady after the central bank kept its interest rate unchanged at 1.25 per cent for a 10th straight month on Thursday.
Chinese shares were up almost 0.1 per cent, while Hong Kong stocks pulled back 0.2 per cent.
The yuan rose 0.2 per cent as the dollar wilted after Trump said the dollar is getting too strong and that would eventually hurt the economy.
Sentiment in China and the rest of Asia was also supported as Trump backed away from labeling China a currency manipulator in an interview with the Wall Street Journal.
“Trump's comments came at a time when some had begun to think that perhaps the president was not as supportive of a weak dollar as initially perceived,” said Shin Kadota, senior strategist at Barclays in Tokyo.
Trump also didn't rule out the possibility of re-nominating Fed Chair Janet Yellen once her four-year term is up next year.
Trump said labelling China a currency manipulator now would hurt talks with Beijing on dealing with North Korea's threats.
“The change in policy should certainly ease concerns over the protectionist stance of the Trump administration that should benefit emerging markets in general,” James Woods, global investment analyst at Rivkin in Sydney, wrote in a note.
“However it also continues to raise doubts about the administrations ability to deliver on campaign promises, which include the all-important pledge for tax reform.”
US 10-year Treasury yields were trading at 2.2339 percent, after earlier touching a five-month low of 2.221.
The dollar was almost 0.1 per cent lower on Thursday at 108.9 yen , lingering near the lowest point since November 17 hit earlier in the session. It ended Wednesday with a 0.55 per cent loss following Trump's comments.
While US and global politics have consumed investors' attention this week, a raft of Asian economic data shares some of the spotlight on Thursday.
Singapore's central bank kept its exchange-rate based policy unchanged as expected on Thursday, saying a “neutral” stance will be needed for an extended period of time, after data showed the city-state's economy contracted in the first quarter.
Australian employment rose by a seasonally adjusted 60,900 in March, handily beating expectations for a gain of 20,000, with February numbers also revised upwards. The unemployment rate held at 5.9 percent, as expected.
Other data due on Thursday will include March trade figures from China.
In commodities, oil prices fell as concerns about rising US output continued to weigh.
US crude slipped about 0.1 per cent to $53.06 a barrel, extending Wednesday's 0.5 per cent loss that saw it break a six-session winning streak.
Global benchmark Brent was fractionally lower at $55.84, failing to make up any of Wednesday's 0.7 per cent loss.
The dollar's loss was gold's gain. The precious metal was steady at $1,287.90 an ounce, after earlier hitting its highest level in five months.
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