Asia's stock markets edged up to a fresh three-month high on Wednesday, with the dollar again under pressure but sentiment was largely cautious ahead of the US Federal Reserve's next move.
The inch higher in equities follows two weeks of strong gains, turbocharged by Friday's data showing a completely unexpected rise in US employment last month. Support for safe haves from gold to the yen, though, pointed to growing caution.
European stock futures fought for headway, with FTSE futures up 0.4% and EuroSTOXX 50 futures up by half a percent. US stock futures rose 0.6%.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, which has galloped 9% higher in June and is 35% above March lows, rose 0.5%. Japan's Nikkei .N225 rose 0.3%.
"The Fed tonight is a key variable in determining whether this is a pit-stop or U-turn," said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.
No action is expected, but any hint of taking the foot off the pedal could hammer risk sentiment and lift the dollar, while more dovishness could have the opposite effect.
Focus is on the Fed's economic outlook and whether a steepening of the US yield curve during last week's bond market selloff might prompt intervention at longer tenors.
"Markets continue to expect a lot from the Fed because the Fed has continued to deliver tremendous amounts of support in the form of liquidity," said Jason Brady, chief executive officer at fund manager Thornburg Investment Management.
"Over the last decade or so, every time, the Fed has tried to resist the markets, by suggesting that they'll be less accommodative, they've ultimately ended up caving," he said, adding he expects some form of yield curve control.
A statement from the Fed is due at 1800 GMT followed by a news conference half an hour later.
Benchmark stock indexes in Australia , Hong Kong .HSI and South Korea .KS11 more or less idled. US 10-year yields held at 0.8271%, 13.2 basis points below a Friday peak of 0.9590%.
Investors are closely watching how the Fed takes last week's surprisingly positive jobs figures and are hoping the central bank does not ignore the woeful data that markets have mostly shrugged off for weeks.
"(Fed) members have probably slept better in recent days, but they know the economy is a long way from where it was before the pandemic," said Radhika Rao and Philip Wee, analysts at Singapore's DBS Bank in a note on Wednesday.
"That's what the fear-of-missing-out and there-is-no-alternative investors need to remind themselves too."
The latest reminders include the sharpest slump in China's producer prices in four years - pointing to flagging global demand - and a collapse in German exports and imports.
Currency markets turned more optimistic late in Asian trade, with the risk-sensitive Australian and New Zealand dollars heading for another attempt on major resistance levels.
The Aussie last sat at $0.6995, about 0.7% below an 11-month high of $0.7043 hit a day earlier, while the kiwi rose 0.6% to $0.6549. The yen hit a week-high at 107.53 per dollar, reflecting caution.
Gold was firm at $1,716.90 per ounce.
Oil prices were on the back foot on renewed concerns about oversupply and underlying economic weakness. Brent crude was last down 1% for the session at $40.67 per barrel and US crude was 1.6% weaker at $38.30 a barrel.