Asia's stock markets steadied on Wednesday, with signs of a slowdown in U.S. wages bolstering hopes that the Federal Reserve could hint at an end to interest rate hikes at its meeting later in the day.
Wall Street indexes had rallied, as had bonds to a lesser extent, while the dollar gave up gains overnight when the Fed's preferred wages gauge, the U.S. employment cost index, showed a 1% rise last quarter, its smallest increase in a year.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.6% by mid-session, following a 1.2% drop on Tuesday, while Japan's Nikkei (.N225) was flat.
The Fed will announce its rate decision at 1900 GMT, followed by a news conference with Chair Jerome Powell half an hour later.
Interest-rate markets have priced in a slowdown in the cracking pace of rate hikes, with Wednesday's expected 25 basis point (bps) hike seen bringing the Fed funds rate target range to 4.5-4.75%.
"The market is anticipating some pushback from Powell, although it's difficult to pin down how much is enough to convince the market," said Brian Daingerfield, head of G10 currency strategy at NatWest Markets.
"Anything short of Powell going 10 for 10 hawkish may ultimately be seen as being not hawkish enough. Conversely, the market may take even the smallest dovish concession and run with it."
Currency trade has been in a holding pattern ahead of the Fed and Bank of England and European Central Bank meetings that follow on Thursday.
The dollar dropped for a fourth straight month in January, and lost 1.5% on the euro and 0.8% on the yen . Both pairs were steady in Asia, with the euro at $1.0865 and the dollar buying 130.14 yen.
The Australian dollar , which gained 3.5% through January, took a breather at $0.7072.
U.S. treasuries were cautiously firmer in Asia, with benchmark 10-year yields down 2 bps to 3.5069%. S&P 500 futures fell 0.3%.
