Asian shares firmed on Friday, supported by solid Chinese trade data, while the dollar skidded after European Central Bank President Mario Draghi suggested the central bank may begin tapering its massive stimulus programme this autumn.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6 per cent, and was set for a 0.3 per cent gain for the week.
But futures suggested Asia's brighter mood would not bring much cheer to Europe, with the Eurostoxx 50 down 0.2 per cent, DAX futures down 0.3 per cent and FTSE futures 0.2 per cent lower.
China's August exports rose 5.5 per cent from a year earlier, slightly missing analysts' forecast of a 6.0 per cent increase, while imports grew a robust 13.3 per cent, handily beating expectations of 10 per cent growth and reinforcing views that the economy is still expanding robustly despite tighter policy.
Japan's Nikkei stock index was pressured by a stronger yen and slipped 0.6 per cent, giving up 2.1 per cent for the week.
Australian shares slipped 0.3 per cent, hit by weakness in energy and financial sectors, with Commonwealth Bank of Australia coming under renewed pressure as it struggled to shake off a money-laundering scandal.
South Korean shares fell 0.1 per cent, as automakers led by market heavyweight Hyundai Motor dropped on worries its Chinese joint venture partner may pull out following the deployment of an anti-missile system that has angered Beijing.
Markets are worried that Pyongyang could launch another missile test on Saturday, North Korea's founding day.
Wall Street had ended little changed on Thursday as investors continued to track Hurricane Irma, which was bearing down on Florida even as Texas struggles with the devastation caused by Hurricane Harvey.
Economists said Harvey could weigh on US economic growth for the third quarter, though they did not expect this to delay the US Federal Reserve announcing at its meeting this month a plan to start trimming its $4.2 trillion debt portfolio.
The storm caused US initial jobless claims to spike to a two-year high, despite underlying strength in the labour market.
New York Fed President William Dudley had said on Thursday the central bank should continue gradually raising rates given that low inflation should rebound, sounding slightly less confident than his previous hawkish comments after weak inflation readings.
The benchmark US Treasury yield stood at 2.024 per cent in Asian trade, down from its US close of 2.061 per cent. It plumbed a 10-month low of 2.016 per cent earlier.
Besides the effect of slumping Treasury yields, the dollar was also pressured by remarks from ECB President Mario Draghi who said policymakers would decide on tapering this autumn, and that “probably the bulk of these decisions will be taken in October.”
The ECB must take into account the weakening of inflation owing to the strong euro as it prepares to wind down its stimulus, Draghi said after the ECB kept rates at record lows at its regular policy meeting and confirmed that asset purchases would continue at least until December.
Draghi “talked about the euro, but in terms of volatility. He talked about the strength of the euro having an impact on inflation, but other than saying he's going to watch and monitor it, there wasn't anything to suggest that they're going to do anything about it,” said Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore.
If the strengthening currency “had some impact on their tapering plan, that would have been different, but clearly at the moment, it looks like that's not the case,” Kotecha said.
The euro was up 0.4 per cent at $1.2065 after touching a high of $1.2090, its firmest since January 2015. It was up 1.7 per cent for the week. The dollar fell 0.6 per cent against the yen to 107.82, moving back towards a 10-month low of 107.62 touched earlier. It was 2.2 per cent lower for the week.
The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.5 per cent at 91.188, after falling as low as 91.011, its weakest since January 2015. It was on track for a 1.6 per cent weekly loss.
The Australian dollar rose 0.7 per cent to $0.8101, scaling its highest peaks since May 2015. China's yuan strengthened further against the US dollar to its strongest in nearly 21 months.
Crude oil futures firmed, with Brent crude gaining 0.5 per cent to $54.77 a barrel, while US crude edged up 0.1 per cent to $49.14 per barrel.
On Thursday, global crude oil benchmarks diverged, with Brent rising to a 5-1/2 month high. But US crude slipped on a bigger-than expected stock build, as the restart of US refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.