Fears of a trade war have mounted this month after US President Donald Trump slapped hefty tariffs on steel and aluminium imports, and then specifically targeted China by announcing plans for tariffs on up to $60 billion of Chinese goods.

The Wall Street Journal, citing sources, reported on Monday that the two countries have quietly started negotiating to improve US access to Chinese markets.

The media report "has somewhat brought a mild relief to markets," Maybank said in a note.

"Trade war could pose risks to synchronized economic recovery and derail broad dollar downtrend," it said, adding that a downtrend would "resume on unwinding of trade tensions".

Emerging currencies also received a boost from the news the United States had agreed to exempt South Korea from its steel tariffs.

South Korea is the third-largest steel exporter to the United States and the world's top importer of Chinese steel.

The Malaysian ringgit and Singapore dollar led regional gainers on Monday, each advancing more than 0.25 percent against the dollar.

Malaysia and Singapore play a major part of the supply chain to China's exports to the United States and their currencies are prone to any disruption in trade between China and US

The Philippine peso and Thai baht both gained about 0.2 percent.

China's yuan eased slightly as local companies stocked up on the greenback.

Some analysts said tensions around a global trade war could prompt the Fed to be less aggressive in its tightening path this year.

Last week, the Federal Reserve maintained the view that it would raise interest rate three times in 2018 instead of the four that some dollar bulls had hoped for.

Stephen Innes, Asia-Pacific trading head at OANDA, said a trade war would bring a "big storm" the Fed would have to factor into its decisions.

"We might be back at the old dovish Yellen stage," he added, referring to former Fed Chair Janet Yellen.

Innes said currency markets "seem pretty happy taking on a little bit more risk" at present as there's no indication yet that the Fed's 2018 rate hike path will get steeper.