The U.S. dollar sagged to eight-month lows on Thursday as the U.S. government shutdown dragged on with no end in sight, though share markets found comfort in expectations major central banks might now have to stay super-loose for longer.
Also helping sentiment was an upbeat survey on China's huge services sector, an antidote to a disappointing report on manufacturing earlier in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan moved 0.8 percent higher, after a flat performance on Wednesday.
Japan's Nikkei recovered early losses to be steady on the day, while Australian shares added 0.7 percent.
A meeting between U.S. President Barack Obama and congressional leaders produced nothing but blame and counter-blame, dimming hopes of an early end to the budget impasse.
So far, investors have been wagering that a deal would be reached in time to avoid lasting damage to the economy, although another fight over the debt ceiling still looms.
The ceiling is far more important than the shutdown since it could lead to an unprecedented default by the United States, an outcome the market assumes is unthinkable.
"To the extent that we have never been in a situation where the debt ceiling has not been raised, there is a high degree of uncertainty over how events will transpire," said Elliot Clarke, an economist at Westpac in Sydney.
"That said, what is plainly evident is that a protracted stalemate would have a significant impact on the US economy."
Already one effect has been to further cloud the outlook for when the Federal Reserve will start scaling back its asset-buying programme.
Eric Rosengren, head of the Fed Bank of Boston, said on Wednesday that the government shutdown could further delay a tapering because of a lack of official data on the economy.
That only amplified the startling swing in market thinking about the future course of U.S. interest rates.
Just a month ago, the futures market had predicted the Fed funds rate would be up around 1.465 percent by the end of 2015. Now it implies a rate of just 0.745 percent.
That in turn has helped drag yields on the benchmark 10-year U.S. Treasury note down to 2.62 percent, from a September peak of 2.99 percent.
In contrast to the increasingly dovish outlook for U.S. rates, the European Central Bank (ECB) on Wednesday left interest rates unchanged and gave no hint it was considering further easing.
The dollar's diminishing yield advantage saw it peel off to a fresh eight-month trough against