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Hong Kong - Asian markets edged up on Friday and the dollar rallied on hopes for Donald Trump's tax cut plans but there is a sense of caution that the rally may have run its course as equities sit at multi-year highs.
A succession of strong earnings and economic indicators has fuelled optimism on trading floors in recent weeks, with Wall Street's three main indexes continuously hitting records.
However, there is chatter that it might be time to take a breather with a number of key issues on the horizon including the choice of a new Federal Reserve boss, Brexit talks and the Catalan crisis.
Treasury chief Steven Mnuchin said this week that markets could see a correction if US lawmakers fail to pass the president's tax-cut measures, while People's Bank of China governor Zhou Xiaochuan warned of "excessive optimism" and a possible plunge in prices.
But Trump's promise to pass the legislation moved a step closer when senators agreed a budget resolution that unlocks a procedure allowing Republicans to push through such measures without the need for Democrat help.
While the controversial proposals still have a long way to go before being passed, the news boosted the dollar against the yen, euro and pound.
Stephen Innes, head of Asia-Pacific trading at OANDA, said: "It's likely not too late to jump on this party bandwagon as global equity markets continue ratcheting higher... or the Trump trade bandwagon for that matter."
Tokyo ended the morning marginally higher as a weaker yen helped reverse early losses to put the Nikkei, already at two-decade highs - on course for its 14th straight gain.
Hong Kong rallied 0.7% after sinking almos 2% on Thursday on profit-taking, while Sydney and Seoul each put on 0.4%, and Singapore gained 0.3%. But Shanghai eased 0.1% and there were also losses in Taipei and Manila.
Tumbling kiwi
Traders are keeping a keen eye on events in Europe where Spain's government said it will start seizing some of the Catalan regional government's powers after the region's leader warned he could declare independence.
The crisis has sparked concerns about one of the European Union's biggest economies and Madrid has already cut its growth forecast for next year owing to the crisis.
At the same time EU and British officials are deadlocked in Brexit talks with both sides blaming the other, leading to uncertainty.
Data is also beginning to show frailties in Britain's economy as the weaker pound sends inflation soaring, which in turn is hitting consumers.
The New Zealand dollar is down more than three percent from Thursday morning after Labour's Jacinda Ardern was made prime minister after weeks of wrangling following an indecisive general election.
"After a decade of National Party rule, the change to Labour was always going to increase uncertainty," said Greg McKenna, chief market strategist at AxiTrader.
"But when Arden says things like she wants to lead an 'active government' and that 'we won't just allow the economy to be carried by housing price inflation and population growth' traders wonder exactly what that means."
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