The U.S. dollar held near a 10-week low against a basket of currencies on Wednesday ahead of a statement from the U.S. Federal Reserve, which is expected to reaffirm the central bank's focus on supporting growth.
U.S. stock index futures ticked higher after President Barack Obama delivered the annual State of the Union address, pointing to a modestly firmer opening on Wall Street on Wednesday.
Obama proposed a freeze on domestic spending over the next five years to help reduce the national deficit but analysts said the speech provided no surprises.
The stock market should be fine with the spending freeze, said Christopher Low, chief economist at FTN Financial in New York. People don't want additional stimulus here. This will allow investors to focus on the Fed.
Japan's Nikkei average <.N225> fell 0.5 percent, giving back some of the previous day's 1 percent rally, though other Asian markets ticked up slightly.
The MSCI index of Asian stocks outside Japan <.MIAPJ00000PUS> rose 0.1 percent. Since the start of the year, it has underperformed the MSCI world index <.MIWD00000PUS>, which has risen almost 2 percent.
Emerging Asian markets rose powerfully in 2010, but since then some investors have taken profit, and some pulled money out of economies they fear are the most vulnerable to the harmful effects of inflation, a growing global concern.
Worries over monetary tightening will persist in the long term, weighing especially on shares of producers dependent on raw materials as their prices are still near all-time highs, said Masayuki Otani, chief market analyst at Securities Japan Inc.
The perception that the U.S. Federal Reserve will maintain a much easier policy than the European Central Bank, which is worried about inflation, has helped boost the euro to near a two-month high.
At $1.369, the euro hovered just below Tuesday's two-month high of more than $1.37, which it achieved partly on the strength of Asian buying of the euro zone's debut European Financial Stability Facility bonds.
A pledge by the Fed, which concludes a two-day policy meeting on Wednesday, to continue its $600 billion bond-buying plan could further help the euro versus the dollar, analysts said. A statement will be released at around 1915 GMT on Wednesday.
Shares in LG Electronics <066570.KS>, the world's No. 2 TV brand and No. 3 mobile phone maker, fell around 4 percent ahead of its fourth-quarter results statement, although they rebounded after the release on hopes business conditions for the firm may now pick up.
It reported a record quarterly loss on weakness in its main businesses but a one-third increase in its shares since lows in November reflect expectations the worst may be over.
Underlining concerns that the rising cost of food could become a broader inflation problem for many economies, benchmark Chicago wheat prices rose around 1 percent to $8.44- a bushel in electronic trading on Wednesday.
That pushed them to their highest level since August 2008 on demand for high-quality wheat, which is in tight supply.
U.S. crude oil futures rose 21 cents to $86.40 per barrel, following six days of consecutive losses during which prices fell by almost 6 percent.
Those losses were driven by expectations of large U.S. oil inventories, and concerns among investors and policymakers that high commodities prices are fuelling inflation, which in turn may slow economic growth.
Gold was little changed at $1,333.51 per ounce. It hit a three-month low of $1,322.70 on Tuesday, knocked by falling investor demand as an improving economic outlook lessens gold's appeal as an asset which gains in value while other financial instruments appear at risk.