Dollar Maintains Support as Traders Eye Fed

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The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 89.67, the highest since February 14. The index has bounced nearly 1 percent so far this week, after slumping 1.5 percent the previous week to its lowest level in three years.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent after slipping earlier in the session following the US market losses, which snapped a six-session winning streak.

The Fed's more upbeat take on inflation, as seen in the minutes of the January 30-31 policy meeting released on Wednesday, will likely further cement expectations that new Fed chief Jerome Powell will lead his colleagues in raising rates next month.

Proof may not yet be conclusive that U.S. inflation is on the rise but since when did markets need proof? She was succeeded by Jerome Powell, who is expected largely to carry on Yellen's strategy of gradual rate hikes.

The U.S. dollar has been pressured this year by a number of factors, mentioned above, including Washington's seemingly pursuit of a weaker currency.

The confidence amongst dollar traders has been weakened as worries gain traction over the State's current account and budget deficits.

Tuesday's stock slide also came as yields on USA government notes briefly hit their highest point since September 2008. The 10-year Treasury has hit a high of around 2.91 per cent recently but has retraced this move somewhat over subsequent sessions, now at 2.88 per cent.

Increased government borrowing has applied steady upward pressure on Treasury yields.

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"Some investors in (Asia) are returning from the Lunar New Year break and trying to catch up after seeing the USA share markets make gains during their absence", said Kota Hirayama, senior market economist at SMBC Nikko Securities in Tokyo.

After the news came out, the USA 10-year Treasury yield spiked to as high as 2.956 percent.

West Texas Intermediate crude rose 0.5 percent to $61.97 a barrel, the highest in two weeks.

Spot gold touched a one-week low of $1,329.42 an ounce, having declined 1.4 percent so far this week. The Russell 2000 index of smaller-company stocks shed most of its gains from earlier in the day.

Chinese financial markets will resume trading on Thursday after being shut for the past week for the Lunar New Year. The index was last up 0.4 percent at a one-week high.

The dollar extended an overnight surge and gained 0.45 percent to 107.800 yen. Hong Kong's Hang Seng rose 1.2 percent.

The Stoxx Europe 600 Index rose 0.4 percent.

The euro edged lower after the release of February's preliminary purchasing managers' survey for the euro zone implied the pace of growth set in January, the fastest in well over a decade, has diminished a little in February.