Tokyo led a rebound in Asian markets Tuesday as the dollar held on to the previous day's gains while investors keenly await Donald Trump's speech to a joint session of Congress.
Ahead of the much-anticipated address later Tuesday the new US president hinted he would make a "big" announcement on infrastructure policy, raising hopes he will deliver on a key campaign promise.
Traders will also be looking for detail on tax reform -- another major pledge -- which this month he said would be "phenomenal".
Global markets and the dollar have surged since Trump's election win in November on expectations his planned measures will fire the US economy and fuel inflation, forcing the Federal Reserve to lift interest rates.
While analysts say there is a worry the advance may have gone too far and investors are beginning to row back, with the dollar feeling the pinch, Trump's speech is growing in importance.
?President Trump?s big address naturally has attracted a lot of anticipation in markets. There is a strong chance that it could be the catalyst for the next leg higher for the US dollar, bonds and stocks,? Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note.
"But there is also room for disappointment."
The dollar got a shot in the arm Monday when the head of the Dallas Fed Robert Kaplan said he thought borrowing costs should be lifted "sooner rather than later".
His comments fuelled speculation the Fed could hike as soon as next month and come days before the central bank's head, Janet Yellen, and her deputy Stanley Fischer are due to talk at the end of the week.
The greenback's improvement from Monday's levels around 112 yen provided support to Japan's exporters, helping the Nikkei end the morning 0.7 percent higher.
The gain came despite Japan logging its first fall in factory output for six months, which highlighted the ongoing struggle the country's leaders face in trying to turn around the world's number three economy.
Hong Kong edged up 0.1 percent after a three-day losing streak and Shanghai added 0.3 percent. Sydney gained 0.5 percent, Seoul was 0.3 percent higher and Wellington put on 0.5 percent.
The gains follow yet a 12th successive record close on Wall Street, with constructors benefiting from an expected surge in spending by the Trump administration.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 0.7 percent at 19,238.74 (break)
Hong Kong - Hang Seng: UP 0.1 percent at 23,937.91
Shanghai - Composite: UP 0.3 percent at 3,237.88
Euro/dollar: DOWN at $1.0583 from $1.0587
Pound/dollar: DOWN at $1.2434 from $1.2440
Dollar/yen: DOWN at 112.60 yen from 112.70 yen
Oil - West Texas Intermediate: UP 10 cents at $54.15
Oil - Brent North Sea: UP six cents at $55.99 per barrel
New York - Dow: UP 0.1 percent at 20,843.19 (close)
London - FTSE 100: UP 0.1 percent at 7,253.00 (close)