Asia shares drift, dollar firms ahead of bank meetings

Asian stocks edged higher and the dollar held firm on Tuesday as traders braced for a slate of central banks meetings this week that is likely to see the US Federal Reserve deliver a rate cut and the Bank of Japan stand pat for now.

Bitcoin, the best-known and the biggest cryptocurrency, remained nestled near the record high of $US107,821 ($A169,177) it touched on Monday. It was last flat at $US106,041 ($A166,384).

The crypto market has been on a tear since the US election in early November as traders wager the incoming Trump administration will usher in a friendlier regulatory environment. Bitcoin is up 150 per cent in 2024.

In stock markets, Australian market was 0.75 per cent higher, with Japan's Nikkei up 0.26 per cent and tech-heavy Taiwan stocks rising 0.5 per cent.

That left MSCI's broadest index of Asia-Pacific shares outside Japan up 0.18 per cent. The index is set for 10 per cent gain for the year, its strongest yearly performance since 2020.

Data on Monday showed China's consumption slowed more than expected in November, pushing stocks lower. On Tuesday, Hong Kong's Hang Seng Index fell 0.4 per cent, while mainland stocks eased 0.13 per cent in early trading.

"More stimulus measures are desperately needed," said Tony Sycamore, market analyst at IG, noting that China's housing market remains fragile despite recent policy support.

"However, those measures are unlikely to come until after the details of US tariffs China are revealed early next year," Sycamore said.

Over in South Korea, the Kospi was down 0.57 per cent, taking its yearly losses to about 7.0 per cent, making it Asia's worst performing market this year.

The market has been under pressure amid political turmoil in the country with President Yoon Suk Yeol impeached and suspended from his duties on Saturday over his short-lived attempt to impose martial law.

On the policy front, central banks in the United States, Japan, UK, Sweden, Norway, Indonesia and Thailand all meet this week, with the BOJ, the Bank of England, Norges Bank and Bank of Thailand expected to stand pat, while the Riksbank is seen cutting rates.

Bank Indonesia on the other hand is expected to hike interest rates to support the rupiah, which is rooted near its lowest in four months.

The spotlight will be on the Fed and especially on the projection for next year with markets pencilling in a 25-basis- point cut on Wednesday.

After the cut on Wednesday, markets see about a 37 per cent chance there will be either one 25 bp cut or none at all through the whole of 2025, according to the CME FedWatch tool, up from about 21 per cent a week earlier.

Charu Chanana, chief investment strategist at Saxo, siad the market will be watching for any signs of a "hawkish cut."

"This means that while the Fed is easing policy, it could signal caution about the pace of future cuts, either through the committee's updated dot plot or via Chair Powell's press conference."

The previous dot plot indicated four rate cuts (100 bps) for 2025, but this could be revised to just three or even two cuts as inflation risks remain elevated, Chanana said.

The dollar index, which measures the US currency against six rivals, was steady at 106.77 and on course for 5.0 per cent gain for the year.

The yen last fetched 154.085 per dollar and remained on the defensive on slim chances of a hike from the BOJ this week, with a majority of economists polled by Reuters expecting the central bank to hold interest rates.

In other currencies, the euro stood at $US1.0520 ($A1.6506)7, on course for a near 5.0 per cent drop in 2024. Sterling was steady at $US1.2689 ($A1.9910).

In commodities, oil prices were little changed as investors fretted about Chinese demand ahead of the Fed meeting.

US West Texas Intermediate crude was down 0.23 per cent at $US70.55 ($A110.70) a barrel, while Brent crude futures fell 0.15 per cent to $US73.82 ($A115.83) a barrel.

Spot gold inched higher to $US2,656.71 ($A4,168.53) per ounce, on course for 29 per cent rise in 2024, its strongest year since 2010.