Asia stocks mark time before US Fed Chair Janet Yellen's speech; dollar firm

Asian stocks edged higher on Thursday but clung to recent well-worn trading ranges while the greenback held firm against regional currencies ahead of a speech by Federal Reserve Chair Janet Yellen at a global central bankers' meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.2 per cent higher. It is down 1.6 per cent after hitting a one-year high last Tuesday.

Japan's Nikkei was down 0.3 per cent, pressured by losses on Wall Street overnight and investor caution ahead of Yellen's speech in Jackson Hole, Wyoming, on Friday.

Market expectations have increased that Yellen might indicate a clearer timeframe for the next US rate hike after strong housing data this week and hawkish comments by other Fed officials, but many analysts expect her to strike a more neutral stance.

"I don't think the Fed will want to introduce market volatility in the run-up to the G20 meeting and she might strike a more neutral stance on interest rate policy," said Gao Qi, an FX strategist at Bank of Nova Scotia in Singapore, referring to a summit of G20 leaders in China in early September.

A US rate increase last December unleashed a selloff in global financial markets, sending emerging market currencies and debt falling sharply. A broad index of Asian shares fell more than 10 per cent in the two months after the hike.

On Wednesday, futures markets were indicating just an 18 per cent chance the US central bank would hike rates at its policy meeting next month, and roughly 50 per cent odds of a rate increase in December, according to CME Group's FedWatch tool.

Taiwan led regional gainers in Asian stock markets with a rise of 0.8 per cent thanks to a bounce in financials, while Chinese stocks were among the top losers, falling nearly one per cent to extend their slide this week.

Major US indexes closed down on Wednesday, pulled lower by weakness in the materials and healthcare sectors. The Dow lost 0.4 per cent and S&P 500 fell 0.5 per cent. Stock futures were broadly flat in Asian trade.

In currencies, the dollar was 0.1 per cent higher at 100.48 yen, inching away from the 100-yen level under which it has dipped in recent sessions.

The pair has traded in a narrow 99.55-102.83 band this month, and could move back toward the upper end of that range depending on Yellen's remarks, analysts say.

"With 40 hours to go before Janet Yellen's testimony at Jackson Hole, the dollar has finally caught a bid," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.

Against a broad trade-weighted basket of its peers, the dollar was flat on the day at 94.758 Against the euro, it was changing hands at $1.12670.

In commodities, crude oil prices remained under pressure after sliding sharply on Wednesday.

US crude was a shade firmer at $46.80 a barrel following a roughly three per cent drop overnight after an unexpectedly large inventory build in the world's biggest oil consumer renewed worries about oversupply.