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Asian markets saw further losses on Thursday, with Tokyo hit by a weaker dollar and Hong Kong coming off a 12-day surge, as the rally that greeted 2018 gives way to profit-taking.

US traders sent all three of New York’s main indexes falling for the first time this year as they were spooked by a report saying Canadian officials increasingly expect Donald Trump to call time on the decades-old NAFTA free-trade pact.

That came after Bloomberg News said Chinese authorities reviewing foreign-exchange holdings have recommended slowing or halting purchases of US Treasuries.

Beijing is the biggest holder of US debt and the move was seen by some as a veiled threat to Trump following his tough talk on global trade and, in particular, what he sees as China’s unfair practices.

But Stephen Innes, head of Asia-Pacific trading at OANDA, said: “While it’s entirely possible that China could take measure to rebalance their reserve, as they have done in the past, the markets quickly dismissed the headline as little more than political sabre-rattling and then correctly determined it’s highly improbable China will stop buying US Treasuries.”

While most agree with that summary, the dollar sank against the yen and continued to struggle in Asia.

The greenback touched a low of 111.27 yen on Wednesday before edging back slightly and in Tokyo Thursday it was up only marginally.

The yen was already making inroads against the dollar after the Bank of Japan on Tuesday said it would cut back on its purchasing of bonds as part of its huge stimulus programme.

– More BoJ tapering? –

Innes added that although the greenback had bounced back against most of its other major peers, it is still down against the yen, “suggesting the market remains on guard against a quicker pace of BoJ tapering”.

The stronger yen hurt Tokyo-listed exporters, sending the Nikkei index 0.3 percent down by the break.

Hong Kong was 0.1 percent lower after an outstanding 12-day unbeaten run, while Shanghai shed 0.1 percent after nine days of gains.

Sydney lost 0.5 percent, Seoul slipped 0.3 percent and Singapore eased 0.2 percent. Wellington tumbled more than one percent while Taipei and Manila were well down.

Oil prices were flat but remain at near three-year highs after a recent run-up helped by falling US stockpiles and unrest in key producer Iran.

Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, said: “The passing of the US tax bill has provided the market with an assumption of stronger demand growth over the medium to long-term. We may continue to have a gentle push forward followed by a period of consolidation.”