Most Asian currencies and shares were in the red on Thursday after investors turned to the safety of the US dollar following overnight data that hinted at global recession.

However, trading was somewhat muted in the run-up to Easter holidays in some major markets. In China, Asia’s largest economy, and Taiwan, trading resumed after a public holiday.

South Korea’s won emerged as the biggest loser for day so far, depreciating nearly 0.5%.

That was closely followed by Taiwan’s dollar, which fell about 0.2%.

Other currencies, including the Singapore dollar, Malaysian ringgit and Indonesian rupiah, slipped as much as 0.2%.

Slowing US services sector data overnight, along with bleak private payrolls growth for March, strengthened the case for the US Federal Reserve to consider pausing its aggressive interest rate hike path adopted to fight accelerating inflation.

A raft of negative economic data since the start of the week has convinced more market participants of an impending recession, resulting in investors exiting riskier assets to take refuge in the greenback, which bounced off from a two-month low.

“The Fed has done the bulk of the work raising rates and thus with demand impacted from tighter financial conditions, the Fed is likely to assess the hikes they have done, in light of weakness in financial stability and softness in the economy,” said Natixis Senior Asia Economist Trinh Nguyen.

Asian currencies stumble on higher crude prices

The dollar index, which measures the strength of the greenback against six major currencies, was 102.00 at 0350 GMT.

“For the past few weeks, weaker US data tends to bring about weaker dollar via the Fed policy channel as markets pare bets on rate hikes,” analysts from Maybank wrote in a client note.

“However, that relationship seems to have shifted a tad as concerns of a sharper economic down cycle could also strengthen demand for the dollar.”

In stock markets, most Asian shares fell victim to fear of a downturn in the global economy, with South Korea’s KOSPI being one of the leading laggards, falling nearly 0.9%.

Indices in Singapore, Malaysia, Indonesia and China fell in a range of 0.1% to 0.6%.

The Philippine index bucked the trend by rising 0.3%.

Highlights:

** Indonesian 10-year benchmark yields fall to 6.676%

** Telkom Indonesia to merge broadband arm with Telkomsel to create $3.9 billion entity

** Taiwan watching Chinese movement after Beijing denounces US Speaker meeting