The US dollar slid to a 3-year-low against a basket of major currencies and Asian stocks jumped to a 3-year high on Thursday, as investors scrambled to get in front of upward momentum in higher-yielding assets, particularly in emerging markets.
Investors have flocked back to risky assets due to strong US corporate earnings and signs the global economy is chugging along even as the U.S. Federal Reserve stays very cautious about when it will start to unwind its super-loose policy.
Dim prospects of the Fed raising interest rates anytime soon pushed the dollar index to its lowest level since August 2008 and charts suggesting that the greenback could move towards an all-time low of 70.698 hit earlier that year.
Asian stocks rose to their highest level since January 2008, extending their rebound from a brief tumble earlier in the week. The MSCI Asia ex-Japan rose 1.1 percent with technology stocks leading gains after iPod maker Apple crushed forecasts.
Shares in Hynix Semiconductor, the world's No.2 memory chip maker, jumped 5.5 percent, buoyed further by a 4.3% spike in the U.S. Philadelphia semiconductor index. Samsung Electronics, the world's No.1 memory chip maker, climbed 1.2%.
"Risk-on mood prevailing in global markets yesterday allowed investors to focus on fundamental strengths of emerging economies, boosting prices of their equities," said Dariusz Kowalczyk, analyst at Credit Agricole in Hong Kong, in a note.
Japan's Nikkei rose a more modest 0.6%.
"The market is looking for clues about the damage from the quake in U.S. earnings, but it's hard to draw any conclusions as both Apple and Intel have very diversified supply chains," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
S&P 500 futures were trading 0.4% higher.
Dollar on back foot, gold at record
The sharply weaknening US dollar has suffered the most against commodity-linked currencies such as the Australian and Canadian dollars, as well as emerging markets currencies such as the Singapore dollar as authorities in Asia allow more currency strength to fight inflation.
Brazil's central bank raised its benchmark interest rate on Wednesday to 12 percent from 11.75% as it seeks to rein in consumer prices.
Spot gold hit a record high of USD 1507.15 an ounce and spot silver soared to a 31-year high while the Australian dollar powered to peaks above USD 1.07 -- a level not seen since the currency became free-floating in the early 1980's.
The euro pushed to 15-month peaks but has lagged the broader move due to the ongoing worries about the euro zone crisis although a solid auction of Spanish debt the previous day helped provide some reassurance.
US Treasury futures were slightly lower, with the June futures on the benchmark 10-year down 4/32 in Asia.