Asian stocks inched higher on Tuesday as investors awaited a slew of economic data, corporate earnings and the US Federal Reserve's policy meeting, while the yen was slightly weaker a day after suspected intervention rescued it from 34-year lows.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.36 per cent higher, set to clock in a nearly 1 per cent gain for the month, its third straight month of gains. Nikkei rose 1 per cent as Japan reopened after a holiday on Monday.
This week's data releases include European inflation and US labour market reports, while the Fed is due to convene on Tuesday for its two-day meeting at which it is expected to stand pat on interest rates but strike a hawkish tone.
The spotlight remains on the yen after a volatile start to the week as the Japanese currency surged to 154.40 per dollar on Monday from a fresh 34-year low of 160.245, with traders citing yen-buying intervention by authorities.
Markets had been anticipating that Japan might intervene to prop up the yen after the currency fell more than 10 per cent against the dollar this year.
On Tuesday, the yen weakened 0.38 per cent to 156.92 per dollar in early trading.
Japan's top currency diplomat Masato Kanda said on Tuesday that authorities were ready to deal with foreign exchange matters "24 hours", while declining again to comment on whether the finance ministry had intervened to prop up the yen a day earlier.
"Whether it's London, New York or Wellington (hours), it doesn't make a difference," the vice finance minister for international affairs told reporters.
Vasu Menon, managing director of investment strategy at OCBC, said intervention alone cannot alter the wide gulf in interest rates that's in part driving the yen's decline.
The yen has been under pressure as US interest rates have climbed and Japan's have stayed near zero, driving cash out of yen and into higher-yielding assets.
"A lot now hinges on the outcome of the Fed policy meeting this week," said Menon.
"Markets will be waiting with bated breath to see if the Fed turns more hawkish, which will support the US dollar and undermine the appeal of the yen. If the Fed does not sound as hawkish as markets fear, this could help the yen to strengthen."
Investors have continually had to dial back expectations for the timing and magnitude of US rate cuts this year after hotter-than-expected inflation reports, with markets pricing in a 57 per cent chance of a rate cut in September, CME FedWatch Tool showed.