TOKYO (Reuters) - Asian shares started the week on a strong note on Monday after a weaker U.S. dollar helped fuel solid gains on Wall Street.
MSCI's broadest index of Asia-Pacific shares outside Japan was up about 1.3 per cent in early trading, while Japan's Nikkei stock average opened up 0.2 percent.
The dollar had rallied in recent months on expectations that the U.S. Federal Reserve was preparing to hike interest rates later this year. The dollar's strength raised fears for the profits of U.S. multinational companies, so its weakness helped power Friday's gains in U.S. shares.
The dollar plunged on Wednesday after the Fed cut its inflation outlook and its growth forecast. Market players'consensus expectation for the U.S. central bank's interest rate hike have shifted, with a majority of Wall Street's top banks now expecting that the Fed will hold off raising rates until at least September, and the odds for a June hike fading, a Reuters poll showed.
"Due to the light economic calendar in the week ahead, the key issue facing market participants is whether the bout of profit-taking on long dollar positions is over," Marc Chandler, chief currency strategist at Brown Brothers Harriman in New York, said in a note.
Against the yen, the dollar stood at 120.03 yen, nearly flat on the day and well below Friday's session high of 121.205.
The euro traded at US$1.0824, also nearly flat and well above a 12-year trough of US$1.0457 logged a week ago, after which it marked its biggest weekly rise against the greenback in three years.
Concerns about Greece's ongoing fiscal woes were likely to cap the euro's upside, even after European Union leaders welcomed a pledge on Friday from Greece to meet creditors'demands for a broad package of economic reform proposals within days to unlock the cash Athens needs to avoid stumbling out of the euro zone.
Commodity currencies also got a lift from the dollar's weaker tone. The Australian dollar added about 0.1 per cent to 0.7780, well above a six-year nadir of $0.7561 hit on March 11.
Crude oil slipped on Monday after strong gains in the previous session as it benefited from the dollar's descent.
Brent was down 1.1 per cent at U$54.70 a barrel after snapping two straight weeks of losses, and U.S. crude shed 1.2 per cent to US$46.01 after marking its first positive week in five.