The U.S. dollar strengthened, with the dollar index rising slightly to 100.77, as market expectations for interest rate cuts adjusted.

Traders are now pricing in a 38% probability of a 50 basis-point cut next month, down from 53% earlier in the week, while anticipating a total of 70 basis points of easing this year.

Federal Reserve Chair Jerome Powell indicated a preference for quarter-percentage-point cuts moving forward, which has reduced expectations for larger cuts.

Upcoming U.S. labor market data, particularly job openings and the ISM manufacturing survey, will be crucial for shaping future rate expectations.

Oil prices remained stable, with Brent crude futures at $71.78 and West Texas Intermediate at $68.22, as investors await U.S. labor data.

Spot gold traded at $2,637.56 per ounce, close to its record high, reflecting a 13% rise over the last quarter.

The MSCI index of Asia-Pacific shares outside Japan fell by 0.13% to 620.05, remaining near its recent high, while Asian stocks eased amid hawkish comments from Powell.

With mainland China's financial markets closed for the week, the recent rally in Asian markets is expected to pause.

Japan's Nikkei index rose by 1.5% in early trading after a significant drop on Monday, influenced by the election of Shigeru Ishiba as Prime Minister.

The South African rand declined after two weeks of gains due to improved investor sentiment.

In Kenya, lawmakers announced plans to impeach Deputy President Rigathi Gachagua, citing accusations of undermining the government.

The World Bank approved a $1.57 billion financing package for Nigeria to support health, education, and sustainable power initiatives.