Asian shares were mostly higher on Wednesday after China's manufacturing sector showed signs of expansion in January and as investors looked ahead to the first review of policy this year by the Fed.
China's official manufacturing Purchasing Mangers Index (PMI) for January came in at 51.3, higher than a forecast of 51.2.
"This marks six consecutive months of expansion in the country's manufacturing sector and shows further stabilization of Asia's largest economy," said Margaret Yang, market analyst at CMC Markets, in a note on Wednesday.
Meanwhile its official services sector PMI came in at 54.6 in January. A figure above 50 represents expansion in the sector, while a figure below 50 indicates contraction.
Over in the U.S., the Fed is expected to hold steady, but investors will eye the tone of the statement after the U.S. central bank in December forecast as many as three interest rate hikes in 2017.
Also in focus is the disarray in currency markets, after U.S. President Donald Trump and his top economic adviser criticized Germany, Japan and China, saying the three countries' devalued currencies were hurting American firms and consumers.
Overnight, U.S. top trade adviser Peter Navarro accused Germany of using a "grossly undervalued" euro to gain advantage over the U.S. and its own European Union partners. These charges were rejected by German Chancellor Angela Merkel who said "Germany is a country that has always called for the European Central Bank to pursue an independent policy," in a news conference.
The euro climbed after the comments, hitting a two-month high of $1.0811 and pressured the dollar lower below the 100 handle. At 2:37 p.m. HK/SIN, the euro/dollar stood at $1.0779.
Navarro and Trump also attacked Japan and China, remarking that these U.S. trading partners were devaluing their currencies to hurt American companies and consumers.
The yen weakened slightly during the Asian session against the greenback, to trade at 113.26, as the Australian dollar held steady at $0.7563. The offshore yuan was weaker at 6.8369 against the dollar while the onshore yuan remains untraded during the Lunar New Year public holiday.
The dollar index remained under pressure trading at 99.8 after the comments, compared to levels above 100 seen this week.