TOKYO :The dollar was on the defensive, shares edged lower, and gold scaled new heights on Wednesday as global markets counted down to an anticipated rate cut by the Federal Reserve later in the day and waited on signals around the extent of future easing.

The euro surged to a four-year high against the greenback in the prior session on the Fed easing bets, while oil remained firm following Ukrainian drone attacks on Russian refineries and ports.

The Fed is expected to cut its benchmark interest rate by a quarter of a percentage point to the 4.00 per cent-4.25 per cent range at the end of its monetary policy meeting later in the global day. The main focus beyond the rate decision will be on Chair Jerome Powell's comments on the outlook for U.S. monetary policy.

"Markets are effectively daring the Fed to over-deliver on the dovish side," said Dilin Wu, research strategist at Pepperstone. "The bigger question, though, is whether Powell can satisfy markets already leaning heavily on a dovish view, or whether conditions are ripe for a near-term shakeout in both USD and gold positioning."

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, edged up 0.1 per cent to 96.689 after a 0.7 per cent slide on Tuesday to the lowest since early July.

The European single currency was down 0.1 per cent at $1.1857, after touching $1.1867 on Tuesday, its highest level since September 2021. The dollar was little changed at 146.52 yen following a 0.6 per cent slide in the previous session.

"If the (Fed) chair is more dovish than expected, of course, you would expect that to weigh on the dollar, but really, how much more bearish can you get from here?" Mahjabeen Zaman, the head of foreign exchange research at ANZ, said on a podcast. "We've already got more than five cuts priced in for the cycle."

Stephen Miran was sworn into his Fed position on Tuesday morning, after the U.S. Senate narrowly confirmed him to the central bank's Board of Governors ahead of its policy meeting. A U.S. appeals court separately declined to let President Donald Trump fire Fed Governor Lisa Cook.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent, after Wall Street closed lower. Japan's Nikkei stock index slid 0.1 per cent after a record close on Tuesday.

European and U.S. stock futures were firmer after a largely soft cash session overnight. The pan-region Euro Stoxx 50 futures were up 0.35 per cent, German DAX futures gained 0.4 per cent and FTSE futures added 0.2 per cent. U.S. stock futures, the S&P 500 e-minis, crept up 0.1 per cent.

The Bank of Canada is also expected to cut rates on Wednesday to contend with a flagging labour market and trade frictions. Soft trade data from Japan showing exports fell for a fourth straight month in August highlighted the toll on major economies from the wide-ranging tariffs imposed by the Trump administration.

U.S. crude dipped 0.05 per cent to $64.49 a barrel after a three-day surge. Russia's oil pipeline monopoly Transneft has warned producers they may have to cut output following Ukraine's drone attacks on critical facilities, three industry sources said.

Spot gold edged slightly higher to $3,690.32 per ounce, after the yellow metal crossed $3,700 for the first time in the previous session.

Dollar and shares languish, gold glitters as Fed verdict looms large