The dollar held pole position in Asia on Friday as bulls wagered a looming US jobs report would add to the chance of rate hikes there, even as the European Central Bank embarks on a trillion euro campaign of bond-buying.
The same balance of risks kept most equity investors cautious with MSCI's broadest index of Asia-Pacific shares outside Japan up a slim 0.2 percent.
Australia's main index dipped 0.4 percent, while Shanghai edged up 0.2 percent. The major exception was Japan's Nikkei which gained 1 percent to a fresh 15-year top after the yen weakened on the dollar.
Analysts polled by Reuters expect US payrolls to have increased 240,000 last month and the jobless rate to have ticked down to 5.6 percent from 5.7 percent.
The recent run of US economic news has been mixed at best, leading analysts to steadily downgrade forecasts for growth this quarter. A strong jobs report could offset all that and give the Fed reason to stick to its tightening timetable at the next policy meeting on March 17-18.
"Another healthy job gain, particularly if accompanied by another relatively firm gain in average hourly earnings, would go a long way toward solidifying expectations for "patient" being removed from the March statement and increasing the perceived odds of a rate hike in June," said Edward Acton, a Treasury strategist at RBS.
An upbeat jobs report would typically be positive for Wall Street, but the risk of an early hike may complicate the market's reaction.
Investors were playing it safe on Thursday with the Dow ending up a bare 0.21 percent, while the S&P 500 gained 0.12 percent and the Nasdaq 0.32 percent.
European markets had no such reservations as shares reached their highest in more than seven years, boosted by encouraging comments from the European Central Bank and strong results from supermarket Carrefour.
The pan-European FTSEurofirst 300 index ended Thursday up 0.8 percent.
ECB President Mario Draghi said the bank's bond-buying programme, due to start on Monday, may last beyond September 2016 if necessary. The bank also increased its economic growth forecasts for this year and next.
Draghi also surprised some by saying the central bank would be prepared to buy bonds with negative yields of up to 20 basis points, triggering a big rally in euro zone bonds.
With yield spreads widening in the dollar's favour, the euro broke below USD 1.1000 for the first time since September 2003, but has since drifted back to USD 1.1026.
Traders said the currency was vulnerable to a test of USD 1.0500, a trough seen in March 2003.
Against sterling, the common currency hovered just above a seven-year low of 72.18 pence. It also struggled at 132.50 yen, near its lowest in a month.
The dollar index traded at 96.332, having climbed as far as 96.593 - a high not seen since September 2003. It was also firm on the yen at 120.10 and held hefty gains on a broad range of emerging market currencies.
In commodity markets, US crude was quoted 36 cents firmer at USD 51.12, while Brent crude gained 37 cents to USD 60.85 a barrel.
Spot gold prices were little changed at USD 1,199.30 an ounce.
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