The dollar retreated against emerging market currencies Tuesday, while equities eased after the previous day's rally as investors look ahead to key central bank meetings in the United States and Japan this week.
The upbeat outlook fuelled by China's surprise rate cut on Friday gave way to concerns about the world's number two economy with the country's leaders gathering in Beijing to discuss their Five Year Plan.
Global stocks have enjoyed a healthy run-up this month -- after suffering their worst quarter in four years during July-September -- and analysts say further easing measures could spark a further advance.
The Federal Reserve begins its two-day meeting later Tuesday, with expectations growing that it will hold off hiking interest rates, with many tipping no increase until early next year.
While the US central bank said earlier this year it expected to tighten monetary policy before 2016, the summer's turmoil on global markets and a slowdown in the world economy have forced policymakers to stay their hand.
Many economists now are tipping a lift-off early in the new year, bolstering emerging market currencies, which had been hammered this year on talk of a 2015 move as investors remove their cash to the United States in search of better, safer returns.
On Tuesday the Australian dollar edged up 0.05 percent, Indonesia's rupiah was 0.13 percent higher, the South Korean won gained 0.40 percent, Taiwan's dollar gained 0.54 percent and the Singapore dollar added 0.10 percent.
The dollar also eased to 120.79 yen from 121.07 yen in New York.
"The Fed and the BoJ meetings this week are pivotal events that will determine whether this rally can go any higher," Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, told Bloomberg News.
"If we see the Fed push back raising interest rates toward 2016 and the BOJ step up stimulus, that will have a big positive impact on equities."
While the Fed toys with a tightening of borrowing costs, a string of below-par data out of Japan has increased pressure on the country's central bank to ramp up its stimulus and market-watchers say it could make an announcement this week.
Calls for further bond-buying have become louder since European Central Bank boss Mario Draghi hinted it could add to its own scheme in December, while China cut interest rates for a sixth time on Friday.
On equities markets there were losses across the board as investors cashed in on recent gains, with Shanghai down 2.2 percent a day after ending at a two month high.
Tokyo eased 0.67 percent by lunch and Hong Kong was down 0.8 percent.
Sydney dipped 0.15 percent and Seoul was 0.26 percent off.
Most markets started the week on a high after the China rate cut but the enthusiasm was overshadowed by ongoing worries about the state of the country's economy, which is a crucial driver of global growth.