Asian stocks gained and the dollar sagged on Friday after a top Federal Reserve official all but cemented expectations of a U.S. interest rate cut later this month.

New York Fed President John Williams said on Thursday that policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold, in a speech read as a strong argument in favor of quick action.

The comments by Williams made it a virtual certainty the Fed would opt to cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also fueled expectations of an even deeper 50 bp reduction.

Financial markets quickly reacted, with futures at one point pricing in almost 70 percent chance of a 50-basis-point cut at the month-end meeting. The odds eased to around 40 percent after the New York Fed clarified later that Williams' speech was not about potential action at the upcoming policy meeting.

Chinese stocks opened higher on Friday, with the benchmark Shanghai Composite Index up 0.29 percent to open at 2,909.68 points. The Shenzhen Component Index opened 0.48 percent higher at 9,198.82 points.

Wall Street shares shook off a sluggish start and moved higher overnight thanks to the dovish comments by Williams.

Australian stocks added 0.4 percent, South Korea's KOSPI rose 0.8 percent and Japan’s Nikkei advanced one percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, squaring the previous day's losses.

"Dovish Fed policy expectations do provide support for the equity markets, which are set to rebound after suffering losses the previous day. But factors such as U.S.-China trade issues and tensions over Iran are likely to limit the markets’ gains," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

The dollar index against a basket of six major currencies stood little changed at 96.778 after losing roughly 0.5 percent overnight to a two-week low of 96.671 in the wake of comments from the Fed's Williams.

The greenback was up 0.15 percent to 107.460 yen after the New York Fed tried to clarify Williams' earlier comments, crawling away from a three-week trough of 107.210 marked on Thursday when the currency lost 0.6 percent against its Japanese peer.

The euro was 0.1 percent lower at 1.1262 U.S. dollars after climbing 0.45 percent the previous day.

U.S. Treasury yields were lower across the board in light of Williams' dovish views. The two-year yield was at 1.7908 percent after touching a two-week low of 1.7520 percent. The 10-year yield declined to a 10-day trough of 2.023 percent and was last at 2.045 percent.

In commodities, U.S. crude oil futures rose one percent to 55.90 U.S. dollars per barrel after slumping 2.6 percent overnight.