The dollar on Monday clawed back some of last week's losses against emerging market currencies after a top Federal Reserve official raised the prospect of a 2015 interest rate hike, while hopes for a pick-up in demand helped oil to score more gains.
The greenback tumbled after data at the start of the month showed US jobs creation stuttered in September, complicating the Fed's plan to increase borrowing costs and tempering worries about a withdrawal of investment from developing economies.
Regional equities also surged last week on hopes for easier US monetary policy, bouncing back after their worst quarter in four years. And most markets extended those gains on Monday, with Shanghai enjoying a third straight rally after a week-long holiday.
Global markets went into meltdown in August after China devalued its yuan currency, fanning worries about the state of the world's number two economy, while traders were also on edge over the expected US rate rise.
On Sunday Fed vice chairman Stanley Fischer said the bank expected to stick to its plan to tighten monetary policy by the end of the year, although he added that the plans were an "expectation, not a commitment".
He added that "both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy".
While his comments, on the sidelines of the International Monetary Fund's annual meeting in Lima, do not indicate the Fed will lift rates, they show that policymakers continue to keep it a consideration.
The dollar edged up in Asian trade against emerging currencies, including the Australian dollar, Thai baht and South Korean won.
- Rate hike likely delayed -
It also enjoyed advances against Indonesia's rupiah and the Malaysian ringgit. However, the gains were small compared with last losses of about eight percent against the rupiah and almost seven percent versus the ringgit.
"The only data supporting raising the Fed funds rate has been employment, which has begun to shrink in the last quarter," Evan Lucas, a markets strategist at IG Ltd. in Melbourne, said in an e-mail to clients.
"Coupled with increased talks of the approaching debt-ceiling negotiations, not to mention the 2016 presidential elections, all means we are seeing signs of the liftoff being pushed back, as inflation remains nowhere to be seen," he said, according to Bloomberg News.
The weaker dollar has also helped rally oil prices in recent weeks while bets on a pick-up in demand for the commodity provided further uplift.
Crude prices have risen by more than a quarter since hitting a six-year low in August as worries about a stronger dollar, a supply glut and weak demand ease.
On Sunday the secretary general of oil cartel OPEC Abdullah el-Badri said he was confident the market will be "more balanced" next year as non-OPEC production contracts and global demand rises. However, he did admit the "market remains oversupplied".
His comments come after he said Thursday demand will rise more than projected this year.
In equity trading Hong Kong rose one percent, Shanghai added 1.5 percent and Seoul gained 0.5 percent. Tokyo was closed for a public holiday. However, Sydney retreated 0.7 percent after rising every day last week.