Dollar inches up ahead of Fed chair Powell's speech
Global shares were broadly steady as the dollar nudged higher ahead of Federal Reserve Chair Jerome Powell's testimony that could offer a steer on the outlook for United States rates, while soft Chinese trade data dented oil.
Data showed China's exports and imports both fell sharply in January-February, reflecting a slowdown in the global economy and weak domestic demand, knocking Chinese blue chips, while the offshore yuan edged up against the dollar.
Crude shipments into China fell in January and February, stirring concern about demand in the world's largest importer, which weighed on the oil price.
Beyond China, investor focus remains on the US interest rate outlook and what Powell might say.
"Over the last few weeks, data out of the US has been far more resilient than expected, fuelling bets that the Fed will have to raise rates beyond what was communicated earlier and rates will stay elevated for longer as well," strategists at Saxo Bank said.
"Most Fed members have also sounded hawkish, raising the prospect of a shift higher in March dot plot.
"If a similar message is conveyed by Chair Powell, we could see US Treasury yields rising again and the dollar reversing back to an uptrend."
The MSCI All-World index of global shares was marginally in positive territory at 641.60 points, close to Monday's two-week highs.
Yields on benchmark 10-year Treasury notes, which have more than doubled in the past 12 months, were last down five basis points on the day at 3.93 per cent.
Yields on the two-year note, which are more sensitive to changes in interest rate expectations, were down four bps at 4.857 per cent.
Two-year yields have more than trebled in the past year to almost five per cent, their highest since 2007.
Money markets show traders believe US rates will peak just shy of 5.5 per cent by September, from a range of 4.50 to 4.75 per cent right now.
The expected peak was closer to 4.7 per cent just a month ago.
Powell starts his semi-annual two-day testimony before Congress on Tuesday.
Investors will monitor his remarks for any insight into his thinking on where US rates will likely head.
Futures traders are pricing in a 76 per cent probability the Fed will raise rates by 25 basis points at its March 21 to 22 meeting and a 24 per cent likelihood of a 50 bp increase.
The US February employment report is expected on Friday and any softening in the robust jobs market will be seen as a sign that the Fed's rate hikes are having their desired effect.
Bank of America chief executive Brian Moynihan on Tuesday told a Sydney business summit the bank predicted the U.S economy would reach a technical recession later this year before the central bank begins cutting rates in 2024.
"It's a very slight recession in the scheme of things. I don't think you'll see a deep recession," he said.
"In our view that is based on a corporate side or a commercial side slowdown, not a consumer side slowdown."
In Europe, a slew of earnings updates helped push the STOXX 600 into positive territory, up 0.3 per cent thanks to gains in healthcare and industrial stocks.
US stock futures rose, with S&P 500 e-minis up 0.2 per cent and Nasdaq 100 futures up 0.3 per cent.
A number of major central banks deliver policy decisions this week.
The Reserve Bank of Australia on Tuesday raised interest rates, as expected, but tempered its hawkish outlook, which investors took as a sign the end to the policy tightening cycle might be near.
That pushed the Australian dollar to a more than two-month low of $0.6690, marking a loss of 0.6 per cent on the day.
The dollar edged up against a basket of major currencies, thanks to gains against the Aussie dollar and the euro, which fell 0.2 per cent to $US1.0661 ($A1.5892).
The dollar lost 0.2 per cent against the yen to trade at 135.69, below last week's 2023 high of 137.10.
Chinese trade data on Tuesday showed a pick-up in crude oil imports - a sign of a likely improvement in energy demand.
Brent crude futures, which are roughly flat this year, were down 0.2 per cent at $US86 ($A128) a barrel, as was US crude at $US80.30 ($A119.70).