Asian currencies slipped after a disappointing Spanish bond auction the previous day helped drag the euro off a seven-week high, giving a lift to the dollar.
Their losses were limited, however, with investors looking to budget negotiations in Washington and the US Federal Reserve's policy meeting next week for direction hints, said Rob Ryan, strategist for RBS in Singapore.
"We're really treading water in many respects ahead of the Fed next week and more importantly the fiscal cliff at the end of December," Ryan said.
Many market players are optimistic that US lawmakers will reach a deal before year-end to avoid the fiscal cliff of tax hikes and spending cuts that could pull the US economy into recession.
Uncertainly lingers, however, and analysts say Asian currencies could fall against the dollar if worries about the US fiscal crisis grow.
President Barack Obama bluntly warned Republican lawmakers on Wednesday that he would not engage in another debt-ceiling standoff and predicted a deal on the fiscal cliff could be reached in a week if his opponents would compromise on taxes.
The Fed's Dec. 11-12 policy meeting is another potential risk for Asian currencies, said Ryan at RBS, adding that the dollar could be boosted if the Fed announces monthly Treasuries purchases that fall short of market expectations.
Many economists think the US central bank will announce monthly Treasury bond purchases of $45 billion to replace "Operation Twist", which expires at the end of the year.
Under Twist, the Fed bought $45 billion of longer-dated bonds a month with the proceeds from the sale of its shorter-dated holdings.
SOUTH KOREAN WON
The won edged lower, pulled down by concerns about the potential for more intervention by local authorities to slow the currency's appreciation.
The South Korean won stood at 1,083.2, staying below a 14-month high of 1,080.2 to the dollar on Nov. 22.
PHILIPPINE PESO
The peso slipped to 40.915 to the dollar after starting Thursday's trade at 40.850, which matched its highest level since March 2008. Since late November, the peso has touched 40.850 several times, including earlier this week.
Position squaring ahead of Friday's US jobs data was likely helping to support the dollar against the peso, a trader for a European bank said.
SINGAPORE DOLLAR
Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore, said that as the Singapore dollar has been trading near the top of the central bank's policy band over the last couple months, some traders have recently made bearish bets against it.
Such players seem to be betting that the US dollar would get a lift due to concerns about the fiscal cliff, he said.
For such bets to work, however, the US dollar would need to get a significant boost, Ji said.
"You need a lot of (US) dollar strength to do it," he said, adding that one reason to be cautious on such bets was the fact that the Singapore dollar has been attracting "safe haven" demand due to the country's triple-A sovereign ratings.
"It's a pain trade to me, actually," he said.
Singapore manages monetary policy by letting its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band.
The Monetary Authority of Singapore defied market expectations in October by keeping monetary policy tight and continuing to allow a modest and gradual appreciation of the Singapore dollar.