TOKYO (REUTERS) - Asian stocks stepped back early on Wednesday (July 20) after a record run on Wall Street showed signs of petering out, while the dollar hovered near a four-month high against a basket of currencies.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent, putting some distance between a nine-month high struck late last week.
South Korea's Kospi lost 0.3 per cent and Australian shares were flat. Japan's Nikkei fell 0.5 per cent, on track to snap a six-day winning streak.
The S&P 500 pulled back from record highs on Tuesday, while the Dow industrials edged up for an eighth straight day of gains, as investors pondered mixed earnings reports.
The dollar index, a gauge of the greenback's strength against a basket of key currencies, stood at 97.046, not far from the nine-month peak of 97.148 scaled overnight.
The dollar traded at 106.16 yen after touching a one-month high of 106.53 overnight. The euro was steady at US$1.1012 after slipping to a three-week trough of US$1.1000.
The Australian dollar stood nearly flat at US$0.7503 after falling 1.1 per cent on Tuesday, when it was dragged down by a New Zealand dollar weakened by growing speculation that the country's central bank it will cut rates in August.
"The US dollar is proving to be a big winner in a period when central banks around the world are talking about easing," wrote Kathy Lien, managing director of FX strategy for BK Asset Management.
"That leaves the Federal Reserve and the Bank of Canada as the lone soldiers standing ground on steady policy. We haven't seen significant strength in the Canadian dollar, partly because oil prices have been falling but the US dollar is seeing nice momentum."
US crude was little changed at US$44.67 a barrel after falling more than 1 per cent for a second day in a row on Tuesday, as a rallying dollar and a global fuel glut offset forecasts for lower US crude stockpiles that typically would have been bullish for the market.
Elsewhere in commodities, nickel stood near 10-month highs amid persistent concerns over a Philippines mining crackdown and zinc was also on a bullish footing after hitting a 14-month peak on concerns over falling mine output.