The U.S. dollar slid to a three-year low against a basket of major currencies on Thursday, a move which could see it test record lows, while Asian stocks jumped as investors scrambled for higher-yielding assets, particularly in emerging markets.
European stocks looked set to rise for the third straight session, following Asia higher, while S&P 500 futures rose 0.5 percent, indicating a likely firmer start for Wall Street later in the day.
Investors flocked back to riskier assets, emboldened by strong U.S. corporate earnings and signs the global economy is chugging along even as the U.S. Federal Reserve remains cautious about when it will start to unwind its super-loose policy.
With little chance of the Fed raising interest rates anytime soon, the dollar index <.DXY> fell about 0.6 percent to 73.898, its lowest level since August 2008, and technical charts suggested it could move toward a record low of 70.698 hit earlier that year.
Asian stocks recovered sharply from a stumble earlier in the week and rose to their highest level since January 2008. The MSCI Asia ex-Japan <.MIAPJ0000PUS> advanced 1.3 percent, bringing its weekly gain to 2.4 percent.
Technology stocks, particularly chip makers, led gains after iPod maker Apple
Shares in Hynix Semiconductor <000660.KS>, the world's No.2 memory chip maker, surged 7.9 percent to a record high. Samsung Electronics <005930.KS>, the world's No.1 memory chip maker, climbed 1.3 percent.
The risk-on mood prevailing in global markets allowed investors to focus on fundamental strengths of emerging economies, boosting prices of their equities, said Dariusz Kowalczyk, analyst at Credit Agricole in Hong Kong, in a note.
Japan's Nikkei <.N225> rose a more modest 0.8 percent.
The market is looking for clues about the damage from the quake in U.S. earnings, but it's hard to draw any conclusions as both Apple and Intel have very diversified supply chains, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, referring to a massive earthquake in Japan last month which knocked many factories offline.
DOLLAR OUTLOOK GRIM, GOLD AT RECORD
The sharply weakening U.S. dollar has suffered the most against commodity-linked currencies such as the Australian and Canadian dollars, as well as emerging markets currencies such as the Singapore dollar as some policymakers in Asia allow more currency strength to fight imported inflation.
Brazil's central bank raised its benchmark interest rate on Wednesday to 12 percent from 11.75 percent as it seeks to rein in consumer prices.
Spot gold hit a record high of $1507.15 an ounce and spot silver soared to a 31-year high while the Australian dollar powered to peaks above $1.07 -- a level not seen since the currency became free-floating in the early 1980's.
For the week, the Aussie was up 1.8 percent, making it the best performer among G10 currencies.
The euro pushed to 15-month peaks but has lagged the broader move due to resurgent worries about the euro zone crisis. Although a solid auction of Spanish debt the previous day helped provide some reassurance, markets remain concerned that Greece is on the verge of announcing a debt restructuring, despite repeated denials by Athens.
U.S. Treasury futures were slightly lower, with the June futures on the benchmark 10-year down 4/32 in Asia.