[HONG KONG] Asian equity markets fell on Friday after a broad global rally, but the dollar strengthened against most other currencies as traders become increasingly confident the Federal Reserve will hike interest rates this month.
Investors took their cash off the table on profit-taking on Thursday after the previous day's surge fuelled by Donald Trump's address to Congress, in which he promised massive infrastructure spending and tax cuts.
But with Fed boss Janet Yellen due to speak on Friday the greenback has bounced back as experts say the bank is odds-on to tighten monetary policy in the face of an improving US economy.
Comments from three top Fed officials, including a noted dove, have cemented those expectations.
"The Fed rate hike balloon has successfully been floated, and the market has continued to reprice the March rate hike probability fuelled by the dove of doves, Lael Brainard, who came out 'hawks-a-blazing' at exactly the appropriate time," said senior OANDS trader Stephen Innes in a note.
"With Brainard flying the dove's coup, she has tipped the scales in overwhelming favour of a rate hike as the market now views March as fait accompli."
The dollar, which has swung wildly as investors try to gauge Mr Trump's plans and veiled Fed messages, broke above 114 yen for the first time in two weeks in Asia on Thursday and pressed on through the day.
In Tokyo it was slightly down against the yen but well up from the levels below 112 yen touched earlier in the week, while it maintained recent gains against the euro and pound.
However, it surged against higher-yielding and emerging market currencies. It jumped 0.9 per cent against South Korea's won, 0.2 per cent on the Indonesian rupiah and 0.8 per cent versus Australia's dollar. Malaysia's ringgit as well as the New Zealand and Singapore dollars were also sharply lower.
Share traders headed for the door ahead of the weekend, after the week's surge.
Tokyo ended the morning session 0.1 per cent lower, with dealers brushing off news that Japanese consumer prices rose last month for the first time in almost a year.
Hong Kong sank 0.8 per cent and Shanghai was 0.7 per cent off, while Seoul slipped 1.2 per cent, Singapore shed 0.9 per cent and Sydney dived one per cent.
There were also big losses in Taipei, Wellington and Manila.
The losses follow selling in Europe and New York, where all three main indexes again hit record highs this week.
Oil prices edged up marginally after tumbling more than two percent Thursday in reaction to the stronger dollar - which makes the commodity more expensive for holders of other currencies - and news that Russia was well short of its promised output cuts.
Despite agreeing to slash production as part of a deal with global producers to address a global glut, Moscow's reductions were only a third of what it pledged in January and February.