Asian shares edged up on Thursday, buoyed by resource shares, while the dollar was on the defensive after minutes from the Federal Reserve's latest policy meeting suggested the possibility of more stimulus measures for the U.S. economy.
The Australian dollar jumped to a 15-month high against the yen and a two-year peak against the euro after November retail sales surged past all expectations, adding to the chances of a fourth straight rise in interest rates next month. It shot to a 15-month high on the yen.
Japanese markets were calm after Japan named fiery Deputy Prime Minister Naoto Kan as finance minister on Wednesday, turning to a politician with less hawkish fiscal views than his predecessor.
But some investors were wary in the wake of minutes from the Fed's last meeting as well as a report showing the U.S. service sector showed only marginal growth. A private-sector employment report showed job losses slowing down but the result was still higher than expected.
Investors will tread carefully today, as U.S. economic data which came out overnight was not stellar, said Kim Seung-han, a market analyst at HI Investment Securities.
Many are turning their focus to U.S. non-farm payrolls data due out on Friday to wait for trading direction. The rate of job losses at U.S. private employers slowed in December to 84,000 from 145,000 in November but still exceeded the 72,000 expected by economists.
Investors are waiting for the U.S. jobs report on Friday but the current climate of the market is one of investors willing to take risk, said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking.
Australian shares <.AXJO> edged down 0.1 percent, with weakness in major financial stocks offsetting gains in miners and retailers that analysts said could be due to investors moving out of the sector to put their money to work in mining shares.
BHP Billiton rose 0.5 percent and Rio Tinto rose 0.8 percent.
Japan's Nikkei <.N225> edged up 0.1 percent, largely on strength from resource shares, but gains were limited by worries about overheating after the benchmark hit a 15-month closing high on Wednesday.
Japan Airlines Corp <9205.T> dropped 8.3 percent after the Nikkei business daily reported the airline is likely to post a net loss of 1.23 trillion yen ($13.3 billion) this financial year due to a huge restructuring charge, according to a plan from a state-backed turnaround fund.
The MSCI Index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS>, which has been trading at 17-month highs, edged up 0.3 percent. A similar Thomson Reuters index <.TRXFLDAXPU> was flat.
COMMODITIES, AUSSIE SHINE
Copper on Wednesday hit a 16-month high after upbeat U.S. manufacturing and auto sales data earlier in the week added to signs of economic improvement and raised prospects for better demand for metals.
Aluminum climbed on supply concerns as harsh cold weather hit parts of China, while lead and zinc also rose to multi-month highs.
But gold inched lower on Thursday after hitting a three-week high. Spot gold was changing hands at $1,133.70 an ounce as of 9:10 p.m. EST.
The Australian dollar shone after retail sales rose 1.4 percent in November, strengthening hopes for another interest rate hike, which stands at 3.75 percent after three 25-basis-point increases in as many months.
Rates at the moment are just too low for an economy that has proven very resilient and has come out of a global recession rather unscathed, said Helen Kevans, an economist at JPMorgan.
We expect rates at 4.5 percent mid-year and 5 percent by year-end.
The Aussie rose as far as $0.9268 after the data before falling back to $0.9230. It shot up as far as 85.54 yen, its highest since late September 2008.
The dollar index <.DXY>, which measures the value of the greenback against a basket of currencies, was flat at 77.482. It lost some ground against the euro the previous day after the release of the Fed minutes.
Crude oil for February delivery fell back below $83 on Thursday after settling up $1.41 a day earlier, its highest close since Oct 9, 2008.
(Additional reporting by Jungyoung Park in Seoul and Kaori Kaneko in Tokyo)