(Updates prices)
Asian shares made 15-month highs on Tuesday on renewed confidence of U.S. interest rate cuts, while a weaker yen and a small dip in the Australian dollar kept the dollar steady.
Australia's central bank left interest rates on hold, as expected, but the Aussie dollar AUD=D3 slipped about 0.4% and the Australian stock market rose as policymakers did not strengthen guidance around the risk of another rate hike.
In Hong Kong the Hang Seng .HSI was set to snap a 10-day winning streak with a 0.9% loss, though markets in Taiwan .TWII and South Korea .KS11 were all higher.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.3%. Japan's Nikkei .N225 rose 1.3%.
FTSE futures FFIc1 were up 1% pointing to a positive return from a market holiday. European futures STXEc1 rose 0.3% and S&P 500 futures ESc1 were flat.
The mood was underpinned by last week's softer-than-expected U.S. jobs data and remarks from Federal Reserve Chair Jerome Powell reiterating that the next move in rates will be lower.
"(Powell) said that he is confident policy is restrictive and that if progress on inflation stalled, the (Fed) would hold off on cutting, implying a high bar to hiking," said Goldman Sachs economist David Mericle.
He also said, in a note to clients, that the U.S. hiring rate and other measures of employment growth intentions were soft and the weakest part of labour market data.
Treasuries, which rallied on Friday's jobs figures, traded steady in New York overnight and 10-year yields U10YT=RR held at 4.49% in Tokyo on Tuesday. Interest rates markets price at least one U.S. rate cut this year, in November. FEDWATCH
Demand will be tested at a $58 billion three-year note auction on Tuesday, which is followed by $42 billion in 10-year sales on Wednesday and $25 billion of 30-year sales on Thursday.
AUSSIE SLIPS Expectations of falling rates have weighed on the dollar, though only gently. European policymakers are readying cuts for June, capping the euro, and rates are not expected to move too far above zero in Japan this year, leaving a wide gap with the rest of the world. BOJWATCH
The dollar rose 0.6% on the yen on Monday and a further 0.5% to 154.60 yen JPY=EBS on Tuesday, keeping markets on edge as to whether Japanese authorities may step in again.
Traders estimate Japan spent almost $60 billion defending the yen last week.
The Australian dollar AUD=D3 slipped 0.4% to $0.6601 as the central bank stuck to "not ruling anything in or out" rather than explicitly spelling out rate hike risks in response to inflation proving stickier than its economists had forecast.
Sterling GBP=D3 , at $1.2552, and the euro EUR=EBS at $1.0765, slipped marginally.
In commodity trade, oil was a tad firmer, with Brent crude futures LCOc1 up 0.3% to $83.58 a barrel with a ceasefire deal in the Middle East proving elusive. Gold XAU= rose overnight and was steady at $2,325 an ounce on Tuesday.
Wheat Wv1 , corn Cv1 and soybean Sv1 traded around multi-month highs on worries about unfavourable weather in Russia - where it has been frosty and dry - and Brazil, where there are floods.
Iron ore futures have rallied on clues that China's Politburo is planning more support measures for the beleaguered property sector. Benchmark June iron ore SZZFM4 on the Singapore Exchange has risen almost 25% in a month.
German factory orders are the highlight of the European calendar on Tuesday. UBS UBSG.S and Disney DIS.N report earnings.
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