Asia's stock markets rose on Tuesday as another batch of strong US economic data bolstered the global outlook, while currency and bond markets paused for breath after a month of rapid gains in the dollar and in US Treasury yields.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4% to a two-week high, while Tokyo's Nikkei loitered just short of a two-week peak. The Dow and S&P 500 had closed at record peaks on Monday.
Overnight, on the heels of a bumper jobs report on Good Friday, March data showed a gauge of US services activity hit a record high while at the same time markets are cheering a huge $2 trillion government spending program.
"On aggregate, it's good for the global economy and therefore that's a justification to move into more cyclical-sensitive FX pairs and to buy stocks in general," said Kyle Rodda, market analyst at brokerage IG in Melbourne.
"Yields haven't budged much and so tech stocks have outperformed," he said. In Asia, chipmakers pushed Taiwan's benchmark index up 1% to a record peak and broad gains lifted Australia's ASX 200 to a seven-week high.
The Shanghai Composite was steady, while Hong Kong's stock market remains closed for holidays.
European markets, which have been shut since Thursday's close, were also poised for gains with DAX futures up 1.2%, EuroSTOXX 50 futures 1% higher and FTSE futures up 0.8%. S&P 500 futures were steady.
The yield on benchmark 10-year US Treasuries was steady in New York, and in Asia on Tuesday it fell two basis points to 1.6860%. The US dollar held at $1.1810 per euro after posting its steepest drop in several weeks overnight.
"Considering the strength of the US economic news flow since we left off on Thursday for the Easter break, the surprise ... is that US bond yields are lower than they were in the middle of last week and the dollar is softer," said Ray Attrill, head of FX strategy at National Australia Bank.
The dollar crept a fraction higher on the yen on Tuesday to 110.25 and was broadly steady elsewhere. The Australian dollar held at $0.7647 ahead of a Reserve Bank of Australia policy decision due at 0430 GMT.
The pullback in yields and the greenback follows major moves upward over the first quarter, with an 83 basis point rise in 10-year yields the biggest quarterly gain in a dozen years and a 3.6% rise in the dollar index the sharpest since 2018.
That has been mostly driven by investors betting on the United States leading the global recovery and forcing the US Federal Reserve to hike rates sooner than expected.
Fed minutes from its March meeting are due on Wednesday, although they will not address the most recent data surprises.
Fed Funds markets have priced in a full rate hike by the end of 2022 while eurodollar markets have it priced by December.
"What needs to be tested is how the Fed reinforces and reassures on its flexible average inflation target policy," said Vishnu Varathan, head economist at Mizuho Bank in Singapore.
"The dollar's past few weeks of movement reflects markets moving ahead despite what the Fed has said," he added.
The dollar's overnight wobble helped oil prices higher and Brent crude futures rose 1.2% to $62.91 a barrel while US crude climbed by the same margin to $59.35 a barrel. Gold tacked on 0.3% to $1,733 an ounce.