"The sentiment is a bit wary given that we are seeing mixed signals coming out from the US- China trade talks," Sim Moh Siong, FX strategist at Bank of Singapore said. Losses in emerging Asia were led by the Philippine peso and Indonesian rupiah.
Hit by the one-two punch of higher oil prices and a wider than forecast trade deficit in January the rupiah dropped to a two-week low, putting it on track for a weekly loss of 1.2 percent, its biggest since October. Southeast Asia's largest economy, which has been struggling to shrink its trade and current account deficits for months, had a trade gap of $1.16 billion in the first month of 2019, official data showed.
The currencies of major oil importers weakened as Brent crude prices hit 2019 highs. The peso and Indian rupee dipped 0.4 percent and 0.1 percent, respectively. Both the peso and rupee, which are among the worst performing Asian currencies so far this year, were headed for a weekly loss.
The South Korean won, which is heavily vulnerable to global trade turmoil, slid 0.3 percent to a three-week low. The won's move was in line with the local KOSPI stock index which fell 1 percent. Bucking the trend, the Thai baht the region's best performer so far this year and in 2018, firmed 0.2 percent.
Thailand's strong economic fundamentals, which consist of steady exports and domestic production, have made the baht a bastion of stability in Asia. The Chinese yuan, Singapore dollar and Taiwan dollar held a soft tone amid weaker economic fundamentals. Singapore reported its lowest GDP growth in two years on Friday, while Taiwan's government trimmed its 2019 economic growth earlier this week as Asia export-focused economies feel the brunt of slowing global growth and the rippling effects of the long drawn China-US trade war.
Meanwhile, China which is also grappling with cooling domestic demand saw its factory-gate inflation slow for a seventh straight month in January to its weakest pace since September 2016, raising concerns the world's second-biggest economy may see the return of deflation.
Bullish positions on most Asian currencies strengthened over the past few weeks, a Reuters poll showed, reflecting newfound optimism that the United States and China would settle their long-drawn trade spat. Long bets on the Chinese yuan, Singapore dollar, Indonesian rupiah and the Thai baht rose substantially, a poll of 12 respondents showed.