Asian markets news: Stocks inched higher and the dollar held steady on Tuesday ahead of a key U.S. inflation report that could help shape the Federal Reserve's rates outlook and determine the timing of interest rate cuts.

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MSCI's broadest index of Asia-Pacific shares outside Japan was 0.15 per cent higher in early trading. The index is down 3 per cent so far in the year.

Japan's Nikkei on the other hand has carried on from last year and is up 12 per cent for the year. On Tuesday, the index rose 1.7 per cent to hit a fresh 34-year high on the back of a weak yen which is nearing the closely-watched 150 per dollar level.

China's financial markets are closed for the Lunar New Year holiday and will resume trade on Monday, Feb. 19, with Hong Kong markets due to resume on Feb. 14, leaving trading in Asia subdued and taking cues from the Wall Street.

On Monday, the Nasdaq slipped in the afternoon session after briefly surpassing its record closing high from November 2021. The benchmark S&P 500 closed lower but remained just above the 5,000-point level it crossed on Friday. E-mini futures for the S&P 500 fell 0.16 per cent. [.N]

Investor attention this week will be on crucial reports on January's U.S. Consumer Price Index (CPI), due later in the day, and Producer Price Index, scheduled to be released on Friday.

A slew of recent data, led by strength in the labour market, has underlined the resilience of the U.S. economy and pushed traders to scale back expectations of early and deep interest rate cuts from the Fed.

Markets have all but chalked off chances of a rate cut in March, with traders pricing in a 13 per cent chance of an easing compared with 77 per cent a month earlier, the CME FedWatch tool showed.

Economists polled by Reuters expect CPI to rise 2.9 per cent on a year-on-year basis, down from 3.4 per cent in the previous month, with annual core CPI inflation also expected to slow to 3.7 per cent in January from 3.9 per cent a month earlier.

However, there is risk of an upside surprise, which could nudge yields higher and further strengthen the dollar, according to Charu Chanana, head of currency strategy at Saxo.

"May rate cut probability is around 70 per cent, and there appears room to push that further to June with markets remaining sensitive to hawkish surprises for now."

Traders are still pricing in 111 basis points of cuts this year versus 75 bps of easing projected by the Fed.

The yield on 10-year Treasury notes was at 4.172 per cent. The dollar index, which measures the U.S. currency against six rivals, was little changed at 104.16.

The Japanese yen, which is sensitive to U.S. rates, was last at 149.38 per dollar, not far from the closely-watched 150 level that analysts said would likely trigger further jawboning from Japanese officials in an attempt to support the currency. [FRX/]

In commodities, U.S. crude rose 0.03 per cent to $76.94 per barrel and Brent was at $81.99, down 0.01 per cent on the day.