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Hong Kong - The dollar eased on Thursday from its latest rally but it held most gains as US Treasury yields sat at four-year highs, but weakness in the technology sector dragged on Asian equities.
Expectations the Federal Reserve will hike interest rates four times this year - instead of the three previously thought - have increased as the improving economy, rising oil prices and Donald Trump's huge tax cuts fan inflationary pressure.
This has led the yield on 10-year Treasuries - which are used as a benchmark for mortgage rates - to break the 3% mark on Tuesday.
The dollar has also pushed to multi-month highs against the yen and euro with the single unit also weighed by fading chances for monetary tightening by the European Central Bank (ECB).
"The US dollar is breaking out and if the ECB is even slightly dovish (at its policy meeting on Thursday) - or perhaps not hawkish - the euro could break wide open and with that, the big surge in the dollar will have truly begun," said Greg McKenna, chief market strategist at AxiTrader.
While the greenback is slightly lower on Thursday analysts say it could soon test the ¥110 level while the euro could dip to $1.2150.
Dealers are keeping a close eye on US growth data on Friday for a better idea about the Fed's monetary policy plans.
With safe government debt offering more attractive returns, riskier assets such as equities have also been hit, though Stephen Innes, head of Asia-Pacific trade at OANDA, said "it looks like the 3% 10-year Treasury doom-and-gloom hand was overplayed".
The Dow and S&P 500 ended with gains in New York but the Nasdaq retreated.
In Asia most major markets were in the red. Hong Kong fell 0.9% and Shanghai shed 1%, while Sydney and Singapore each dipped 0.1%. Manila and Jakarta also sank.
However, Tokyo ended the morning session 0.6% higher thanks to a weaker yen, while Seoul jumped more than 1% and the won also gained ahead of a historic North-South Korea summit on Friday.
Technology firms again struggled on worries about the smartphone sector, which has seen Apple shares battered over the past week.
A strong earnings report from South Korean titan Samsung provided support to its stocks but it warned about falling demand for high-tech handsets as well as competition from Chinese companies.
Apple supplier LG Display fell 3.6% in Seoul and TSMC in Taipei slipped 0.7%, while among other tech firms Hong Kong-listed AAC Technologies dived almost 4% and Tencent shed 1%.
Oil prices built on recent gains as uncertainty over Trump's decision regarding the Iran nuclear deal, along with the OPEC-Russia output cap, helped offset a disappointing reading on US stockpiles.
