Singapore - Asian shares fell on Tuesday, led by falls in Australian stocks on declining commodities prices and a firm local currency ahead of a central bank interest rate decision.
The US dollar struggled to pull away from a three-year trough, while gold, oil and copper prices eased.
MSCI's broadest index of Asia-Pacific shares excluding Japan fell 0.9%, with Australian stocks down 1%. Japan's financial markets were closed for a public holiday.
"Our number one headwind for equities right now is the Aussie dollar," said IG Markets institutional dealer Chris Weston.
The US currency has been under pressure for months due to the Federal Reserve's ultra-loose monetary policy, which has opened up a yield gap between the dollar and currencies such as the euro and the Aussie.
Data surprise
The dollar index , which tracks the dollar against a basket of major currencies, edged up 0.2%, still not far from three-year low plumbed in New York trade.
The euro was around $1.4795, having risen to a 17-month high above $1.49 after surprisingly strong manufacturing data boosted the chances of another European Central Bank interest rate rise.
The Aussie eased from a 29-year high above $1.10 , to trade around $1.0915 ahead of a Reserve Bank of Australia decision due at 04:30 GMT.
The central bank, the first in the developed world to begin tightening policy in late 2009, is widely expected to sit pat on rates, with the focus on the tone of its statement following last week's higher-than-expected inflation report.
"If as some commentators have suggested, the statement will be used to prep the market for a resumption of tightening in June ... then whatever the RBA chooses to say about the currency will be drowned out by the clamour to price an early hike into both the money market and the currency," said analysts at BNP Paribas.
Loonie gains
The Canadian dollar edged up after Canada's Global TV predicted the country's federal election would result in the Conservatives remaining in power.
The loonie has lagged other commodity-linked currency, in part due to uncertainty about the outcome of Monday's election, with the opposition New Democrats pledged to raise corporate taxes, increase social spending and toughen climate change policies.
Oil, the asset often most sensitive to perceptions of geopolitical risk, fell nearly half a percent, but remained about $2 above the Monday low hit after news of the killing of Osama bin Laden in Pakistan by US special forces.
"Reprisals by al Qaeda's or US/NATO military action against al Qaeda in the region could send oil prices higher as well as undermine risk appetite," said BNY Mellon strategist Michael Woolfolk.
US crude futures eased 41 cents to $113.13 a barrel, while Brent crude fell 55c to $124.57.
Spot gold slipped to $1 540.39 an ounce, retreating from a record $1 575.79, and copper fell 0.4%.
Weaker metals prices dragged on shares of big mining firms, with BHP Billiton down 1.4% and Rio Tinto 1.2%.