The euro has come under pressure owing to political uncertainty after a strong showing by far-right parties in EU polls and the calling of a snap parliamentary vote in France
The euro has come under pressure owing to political uncertainty after a strong showing by far-right parties in EU polls and the calling of a snap parliamentary vote in France AFP

Asian markets were mixed Tuesday as traders shifted nervously while awaiting the Federal Reserve's policy decision and the release of US inflation data, while the euro struggled to recover from a sell-off fuelled by political uncertainty in Europe.

After an upbeat run last week fuelled by signs of an easing in the labour market and economy, Friday's forecast-busting non-farm jobs report provided a dose of reality that interest rates might be kept elevated for some time.

Speculation has been swirling about how many, if any, cuts the Fed will introduce this year, with several officials warning that they are reluctant to move too soon for fear of restoking inflation, which remains stubbornly above target.

Focus is now on the conclusion Wednesday of the latest policy meeting and the release of May's consumer price index, which dipped in April after three successive above-forecast readings.

While decision-makers are expected to keep borrowing costs on hold, the main interest is their so-called "dot plot" forecast for them over the coming months.

Traders started the year predicting as many as six cuts but they have whittled them down since then and now the most optimistic estimate is for three, with some even eyeing zero.

"The interest-rate guessing game goes on," said Chris Larkin at E*Trade from Morgan Stanley. "Even the friendliest inflation numbers probably won't push the Fed to act any sooner than September."

All three main indexes on Wall Street pushed higher Monday, with the S&P 500 and Nasdaq chalking up records again.

But Asian investors were less assured Tuesday, after a tepid performance the day before in holiday-thinned trade.

Hong Kong, Shanghai and Sydney all sank on their return from an extended weekend break, while Singapore, Manila and Jakarta were also down.

However, Tokyo, Seoul, Wellington and Taipei all edged up.

The euro remained under pressure against its peers owing to growing political uncertainty after French President Emmanuel Macron called a snap parliamentary election in reaction to a strong showing by the country's far-right in EU elections.

The move followed a crushing blow for centrists in the poll, with hardliners in Spain, Germany, the Netherlands, Italy and Austria also performing well.

Oil dipped after Monday's rally that came as traders await the release of an OPEC report that will outline its forecasts for demand.

The gains followed a recent plunge in the commodity sparked by an announcement from OPEC and other producers that they will start reversing recent cuts.

The losses led officials at the grouping to reassure markets that it still would change its mind if circumstances dictated.

Tokyo - Nikkei 225: UP 0.3 percent at 39,155.16 (break)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 18,033.65

Shanghai - Composite: DOWN 1.2 percent at 3,014.87

Euro/dollar: UP at $1.0768 from $1.0767 on Monday

Euro/pound: UP at 84.57 pence from 84.54 pence

Dollar/yen: UP at 157.22 yen from 157.04 yen

Pound/dollar: DOWN at $1.2731 from $1.2732

West Texas Intermediate: DOWN 0.2 percent at $77.57 per barrel

Brent North Sea Crude: DOWN 0.3 percent at $81.39 per barrel

New York - Dow Jones: UP 0.2 percent at 38,868.04 (close)

London - FTSE 100: DOWN 0.2 percent at 8,228.48 (close)