Asia stocks edge up, dollar dips as markets await US Fed clues

Asia shares inched ahead while the dollar slipped on Tuesday as a dearth of major data left markets with little to do but second guess whether the Federal Reserve will raise US interest rates this year.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent, with South Korea and Australia adding similar amounts.

Japan's Nikkei went the other way and eased 0.4 per cent as the yen gained on the dollar.

The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank's annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity.

"Ever so slowly, the market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is 'live'," wrote analysts at ANZ in a note.

"But in reality, the response has been very muted," they added.

Indeed, US Treasuries actually rallied on Monday, with 10-year yields at 1.55 per cent after falling four basis points overnight.

Fed fund futures imply around a 24 per cent chance of an easing in September, rising to around 50 per cent by December. A quarter-point hike is not fully priced in until September next year.

On Wall Street, the Dow ended Monday down 0.12 per cent, while the S&P 500 lost 0.06 per cent and the Nasdaq added 0.12 per cent.

Biotech stocks received a boost from Pfizer's $14 billion acquisition of cancer drug maker Medivation, which jumped nearly 20 per cent.

Of the 479 companies in the S&P 500 that have reported earnings, 71 per cent have topped expectations, according to Thomson Reuters data. Earnings are currently showing a decline of 2.3 per cent for the quarter.

In forex markets, the dollar slipped a touch to 94.442 against a basket of currencies. The index fell about 1.3 per cent last week on what traders perceived as mixed signals from Fed officials.

The dollar drifted down to 100.11 yen from 100.30 late in New York, while the euro nudged up to $1.1331.

The New Zealand dollar blipped higher after the country's central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on.

The kiwi dollar rose around a third of a cent to $0.7310 in reaction.

Oil remained under pressure after shedding three per cent on Monday. Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count.

Brent crude was off 12 cents at $49.04 a barrel. It hit a two-month high of $51.22 on Friday. US crude futures lost 18 cents to $47.23, after the September contract expired on Monday at $47.05.