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Asian markets were mixed Friday while the dollar and euro hit five-year highs against the yen, as more positive US economic data fuelled speculation the Federal Reserve will announce a cut to its stimulus programme next week.
With attention now fully on the US central bank's policy meeting, each release pointing to a strengthening economy is being pounced on as another step towards a wind-down of the bond-buying scheme.
Tokyo jumped 0.40 percent as the yen tumbled, with the Nikkei adding 61.29 points to 15,403.1, while Sydney rose 0.71 percent, or 35.9 points, to end at 5,098.4. But Seoul eased 0.26 percent, or 5.02 points, to close at 1,962.91.
Hong Kong added 0.12 percent, or 27.84 points, to end at 23,245.96 while Shanghai finished 0.31 percent lower, giving up 6.72 points to 2,196.08.
Global equities have seen a broad sell-off over the past four days after positive economic numbers -- including falling unemployment and strong economic growth figures -- have strengthened the argument for a December cut to the Fed's $85 billion a month asset-purchasing.
Those expectations were reinforced on Thursday after the government said retail sales grew 0.7 percent in November, above the forecast 0.6 percent and pointing to building confidence among US shoppers, a key driver of economic growth.
"The conclusion must be that it is increasingly likely the much debated Fed taper begins next week," National Australia Bank said.
The likelihood of a stimulus cut hit Wall Street, where the the Dow fell 0.66 percent, the S&P 500 declined 0.38 percent and the Nasdaq shed 0.14 percent, marking a third straight loss.
"Investors continue to fret over the Federal Reserve's policy meeting," Chibagin Asset Management general manager for research Yoshihiro Okumura told Dow Jones Newswires. "Until the Fed's decision is made weak market sentiment will continue to persist."
But Naoki Fujiwara, fund manager at Shinkin Asset Management, said traders' fears about a slowdown in Fed easing were misplaced. "The market is overreacting. Tapering itself is not a bad thing, as the US economy has shown improvements.
"Besides, the start of tapering would not mean the end of monetary easing," he said.
Yen faces downward pressure
With the prospect of less cash being printed by the Fed -- in turn leading to a pick-up in demand -- the dollar climbed towards highs not seen since October 2008.
It peaked at 103.92 yen in Tokyo trade while the euro touched 142.82 yen -- both highs not seen since October 2008. However, they eased a tad in the afternoon, with the dollar at 103.60 yen and the euro at 142.59 yen.
The Japanese unit has also been pressured by a growing sense that the Bank of Japan will add to its own monetary easing scheme after a marked slowdown in the country's third-quarter economic growth.
Dealers said the BoJ's Tankan business confidence survey due Monday will give a better idea of plans for its stimulus, which it put into effect in April.
"Investors will be looking for a cue to sell the yen stemming from the BoJ's additional easing," said Citigroup Global Market Japan chief forex strategist Osamu Takashima.
The yen has lost about a quarter of its value against the dollar since late last year when, as leader of the opposition Shinzo Abe, who is now prime minister, promised a policy blitz to stoke the economy.
The euro was also at $1.3765 against $1.3752.
The Australian dollar sank to a three-and-a-half-month low of 89.22 US cents after the head of the country's central bank said he wanted to see it at 85 to help stimulate trade-exposed sectors of the economy.
Glenn Stevens also told the Australian Financial Review he expected the Fed to scale back its stimulus "before too much longer".
On oil markets New York's main contract, West Texas Intermediate for January delivery, was up seven cents at $97.57 in afternoon trade while Brent North Sea crude for January rose 23 cents to $108.90.
Gold fetched $1,223.09 at 1030 GMT compared with $1,242.75 late Thursday.
In other markets:
-- Mumbai ended down one percent, or 210.03 points, to 20,715.58.
Shares of Elder Pharmaceuticals fell 8.17 percent to 298.30 rupees on concerns over its future operations after a deal with rival Torrent Pharma. Private carrier Jet Airways fell 7.04 percent to 272.75 rupees.
-- Bangkok lost 1.11 percent or 15.08 points to 1,341.13.
Siam Cement dropped 2.25 percent to 391.00 baht, while oil company PTT fell 1.35 percent to 293.00 baht.
-- Kuala Lumpur's main index climbed 6.48 points, or 0.35 percent, to 1,840.35.
Telekom Malaysia ended 2.2 percent higher at 5.50 ringgit while Genting Malaysia was up 1.9 percent to 4.38. Hong Leong Financial Group lost 1.5 percent to 15.30 ringgit.
-- Singapore closed up 0.23 percent, or 6.98 points, at 3,066.02.
United Overseas Bank eased 1.08 percent to Sg$20.24 while vehicle distributor Jardine Cycle and Carriage was down 0.24 percent at Sg$34.00
-- Jakarta closed down 0.89 percent, or 37.39 points, at 4,174.83.
Car maker Astra International fell 3.17 percent to 6,100 rupiah, while cigarette maker Gudang Garam lost 1.50 percent to 39,400 rupiah.
-- Taipei rose 0.19 percent, or 15.61 points, to 8,376.94.
Taiwan Semiconductor Manufacturing Co. fell 0.49 percent to Tw$102.5 while smartphone maker HTC rose 1.75 percent to Tw$145.5.
-- Wellington also added 0.19 percent, or 8.86 points, to 4,717.06.
Fletcher Building was up 0.46 percent at NZ$8.77 and Chorus lifted 7.30 percent to NZ$1.47 but Hallenstein Glassons fell 6.5 percent to NZ$3.46.
-- Manila was flat, edging up 4.60 points to 5,767.13.
Philippine Long Distance Telephone rose 0.54 percent to 2,624 pesos, Alliance Global was up 2.70 percent at 22.85 pesos and SM Investments climbed 1.29 percent to 704 pesos.