SYDNEY, Nov 2 ― Asian shares wobbled in cautious trading today while the dollar sagged slightly as investors braced for the US Federal Reserve's policy outcome later in the global day with many looking for any signs of a slowdown in future rate hikes.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.2 per cent lower in early trade, as a drop in Chinese bluechips and Hong Kong shares offset an uptick in South Korea and Australia.

Japan's Nikkei lost 0.1 per cent.

The world's biggest central bank is due to release its policy statement at 2pm EDT (1800 GMT) today, with investors set to closely scrutinise the statement and comments from Fed Chair Jerome Powell for any signal that policymakers are contemplating tempering the rate hikes.

Markets widely expect the Fed to raise its benchmark overnight interest rate by 75 basis points (bps) to a range of 3.75 per cent to 4.00 per cent, the fourth such increase in a row.

However, traders are split on the size of the hike in December, with futures market pricing in a 44.5 per cent probability of a 50-bps increase, according to CME's Fed tool.

"We suspect Chair Powell will try very hard to avoid saying anything that might be misconstrued as a signal that the inevitable step down in the size of tightening is a pivot toward the end of the tightening cycle,” said Kevin Cummins, chief US economist at NatWest Markets.

"Given that the inflation-related data have yet to show any signs of any moderation, we lean a bit more toward officials holding off from signalling they are reducing the size of hikes just yet.”

Cummins expects the Fed to step down to a 50 basis point rate hike in December.

Overnight, a survey showed US job openings unexpectedly rose in September, suggesting that demand for labour remains strong. That sparked a reversal in Treasury yields and lifted market bets on interest rates to above 5 per cent next year.

US stocks closed lower, with the Dow Jones Industrial Average slipping 0.24 per cent, the S&P 500 shedding 0.41 per cent and the Nasdaq Composite falling 0.89 per cent.

In the currencies market, the dollar eased 0.6 per cent against the Japanese yen to ¥147.32 (RM4.73) in thin liquidity, moving further away from its recent high of ¥148.84 just two sessions ago. It held largely steady against other currencies.

The safe-haven greenback gave up some of the rapid gains this year in October on speculation the Fed might indicate a slowdown in its aggressive tightening campaign at its November policy meeting.

The dollar's retreat in foreign exchange markets is temporary, according to a Reuters poll of currency strategists, who said the greenback still had enough strength left to reclaim or surpass its recent highs and resume its relentless rise.

"In the Fed's view, putting the US into a recession is still a lesser evil than not tackling entrenched price pressures,” said Chris Weston, head of research at Pepperstone.

"My own view is the risks are skewed for a hawkish reaction ― USD higher, but I will recognise the moves in rates suggests the market is largely positioned for this outcome.”

US Treasury yields were largely steady today after reversing much of the losses overnight on the unexpected strength in the jobs data.

The yield on benchmark ten-year notes eased 2 basis points to 4.0336 per cent while the yield on two-year notes was little changed at 4.5364 per cent.

In commodities, oil climbed after industry data showed a surprise drop in US crude stockpiles, suggesting demand is holding up.

US crude oil futures CLc1 rose 0.5 per cent to US$88.93 per barrel, while Brent crude futures was up 0.4 per cent at US$94.98.

Gold was slightly higher, with spot price trading at US$1649.50 per ounce. ― Reuters