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Asian markets rode a roller-coaster on Friday, with India's rupee hitting a record low, the yuan at an all-time high and Chinese stocks roiled by rumours of government support for the market or even a trading error.
The jitters across Asia followed a similarly strange session on Wall Street, where normal trading patterns appeared to go out the window as shares fell, US Treasury yields jumped, gold surged and the dollar tumbled.
The rupee fell to a record low as central bank measures to tighten capital outflows and curb gold imports were seen as unlikely to prop up the currency. The rupee hit an all-time low of 62.03 to the dollar.
Chinese shares went on a wild ride, opening weaker before surging for no apparent reason, taking the Shanghai Composite Index up as much as 5.6% and prompting talk that Beijing was planning to announce steps to support the market.
A trading error was also rumoured. Later, the gains evaporated as quickly as they had appeared, leaving traders scratching their heads.
China's yuan meanwhile hit a record high against the dollar as weakness in the greenback spurred some traders to cover positions ahead of the weekend. The currency was trading at 6.1115 after touching a record high of 6.1090 at the open.
US Treasury yields in Asian trade held near two-year highs as signs of improvement in the US job market and rising consumer prices cemented expectations that the Federal Reserve will start reducing its stimulus next month.
The dollar wallowed near a seven-week low, however, as signs of improvement in Europe and elsewhere undercut the perceived relative strength of the US economy, especially in light of some weak US earnings, as well as disappointing factory data.
Also not helping the dollar, other US data released overnight showed China and Japan - the two largest foreign holders of US debt - were at the forefront of a $66 billion exodus from long-term US Treasuries in June, dumping a net $40 billion.
European shares are expected to fall, with Britain's FTSE seen falling as much as 0.3% and German DAX 0.2%.
"I'd say the markets are pricing in an 80 to 90% chance that the Fed will announce tapering in September, although I suspect the Fed will try to send a message to curb the rise in bond yields," said Arihiro Nagata, head of foreign bond trading at Sumitomo Mitsui Banking Corp.
Tokyo's Nikkei share average fell 0.8% while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4%.
The falls were moderate compared to Wall Street, where Standard & Poor's 500 Index shed 1.4%, its biggest fall since mid-June to five-week lows.
