Asian shares turned mixed on Wednesday while rising Treasury yields lifted the dollar as markets wondered if the world's most powerful central banker would confirm or confound expectations for US policy easing this month.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 per cent, after three sessions of losses.

South Korea edged up 0.4 per cent, but Japan's Nikkei lagged with a loss of 0.2 per cent. E-Mini futures for the S&P 500 dithered on either side of flat in very slow trade.

Chinese blue chips barely budged as data showed inflation remained stubbornly subdued despite a spike in pork prices.

A worrying lack of inflation globally is one reason investors are counting on Federal Reserve Chairman Jerome Powell to sound suitably dovish when testifying to Congress on Wednesday.

Futures are still fully priced for a 25-basis-point cut at the Fed's July 30-31 meeting, but have abandoned wagers on a half-point move. They had implied a 25 per cent probability of an aggressive cut before Friday's upbeat jobs report.

“We still think the odds favour a 25 bps “insurance” cut,” said Kevin Cummins, a senior US economist at NatWest Markets.

“The Fed's consideration of rate cuts is not only about growth but also about inflation, which remains well below target, and inflation expectations, which were breaking to the downside before the Fed signalled the likelihood of cuts.”

Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of the bag by saying the central bank was debating the risks and benefits of letting the US economy run “a little hotter.”

Lurking in the background, US and Chinese trade officials held “constructive” talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said.

Wall Street had been duly circumspect, with the Dow ending Tuesday down 0.08 per cent, while the S&P 500 added 0.12 per cent and the Nasdaq 0.54 per cent.

MORE YIELD

The cooling in US rate fever has seen bonds give back just a little of their huge rally, with yields on two-year Treasuries rising to 1.917 per cent from the recent trough of 1.696 per cent.

That, in turn, has helped the dollar bounce on a basket of currencies to 97.521 from a June low of 95.843.

The dollar also firmed to 108.90 yen, while the euro faded to $1.1204 having been as high as $1.1412 just a couple of weeks ago.

The Mexican peso was nursing a few bruises after sliding on Tuesday when the country's moderate Finance Minister Carlos Urzua suddenly resigned, citing “extremism” in economic policy.

The Canadian dollar was on the defensive ahead of a rate meeting by the Bank of Canada in case policy-makers tried to slow the currency's recent rally.

The dollar's gains took the shine off gold, which eased 0.3 per cent to $1,393.48 per ounce.

Oil prices were supported by West Asian tensions and news that US stockpiles fell for a fourth week in a row, easing concerns about oversupply.

Brent crude futures rose 59 cents to $64.75, while US crude gained 80 cents to $58.63 a barrel.

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