Asian shares slipped on Tuesday, following overnight declines on Wall Street, and the dollar hovered below last week's peak, but traders' main focus was approaching central bank meetings and the early stages of the US earnings season.
MSCI's broadest index of Asia-Pacific shares outside Japan, fell 0.46 per cent, walking back some of the previous day's 1.8 per cent gain, and heading back towards last week's two-year low.
Asian tech stocks like Alibaba, Samsung, and Nintendo helped lead the declines, after US equity markets had closed lower overnight, impacted by reports Apple plans to slow hiring and spending growth next year.
Still, in a sign markets were struggling to find a firm direction, US S&P and Nasdaq futures , each rose about 0.3 per cent in early Asia trading, and Japan's Nikkei gained 0.8 per cent after having been on holiday for Monday's rally.
"It's a bit like 'paint by numbers' at the moment, you've got a picture to fill in, but we don't have all the colours yet," said Kerry Craig, global market strategist at JPMorgan Asset Management.
"There are a couple of things missing (such as) the direction of the labour market and unemployment rate in the US, and whether central banks will step back and say 'that's the peak in inflation and we don't need to be as hawkish', or 'we're going to be really aggressive'."
Markets are expecting a large 75 basis point interest rate hike at the US Federal Reserve's meeting next week, moving away from a flirtation with the chance of an enormous 100 basis point rise, though market pricing still indicates a 30 per cent chance, according to the CME's Fedwatch tool.
The retreat from expectations of 100 basis points late last week helped shares to gain in the US on Friday and Asia and Europe on Monday.
The European Central Bank and Bank of Japan both meet on Thursday, with the ECB widely expected to begin raising rates from their pandemic era lows with a 25 basis point hike, while little change is expected from the ultra dovish BOJ.
"In the background we've got earnings season in the US and we're expecting that to be another source of pressure on markets as we think the full year guidance for around 9 per cent-10 per cent of the US is too high," said Craig.
Goldman Sachs Group Inc warned overnight it may slow hiring and cut expenses, as the economic outlook worsens, after reporting a 48 per cent slump in quarterly profit. But, as this beat analysts' expectations, its shares rose 2.5 per cent.
In currency markets, the dollar continued its slow retreat from last week's two decade peak.
The euro was $1.0143 having recovered from its brief fall below one US dollar last week for the first time since 2002, and one dollar bought 138.34 Japanese yen , below its 24-year high of 139.39 also hit last week.
The US benchmark 10 year yield was 2.9781 per cent, having struggled so far this month to break far in either direction from the 3 per cent level.
The two-year yield was at 3.1702 per cent.
Oil, another asset class struggling to find a clear direction, was trading flat having pared early losses, after gaining 5 per cent overnight.
Brent crude was at $106.30 a barrel, and US crude was at $102.58. Spot gold remained soft at $1,706 an ounce.
