SINGAPORE- Asian stocks eased near two-and-half-year highs on Tuesday and the US dollar firmed following hawkish comments from Federal Reserve Chair Jerome Powell that scuppered bets of big interest rate cuts, while Mid-East tension kept risk sentiment in check.

Oil prices were steady and gold traded just below a record high touched last week as investors awaited US labor data for more clarity on the pace of US rate cuts.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.13 percent lower at 620.05 on Tuesday, just below the two-and-a-half-year high of 627.66 touched on Monday. The index is up 17 percent so far in the year.

Japan’s Nikkei rose 1.5 percent in early trading after shedding 4.8 percent on Monday as investors contended with perceived monetary policy hawk Shigeru Ishiba winning a contest to become the country’s prime minister.

Japanese shares were buoyed by a softer yen which stood at 144.09 per dollar in early trading.

With mainland China’s financial markets closed for the rest of the week, the blistering rally that has buoyed Asian markets in the past week is set to take a breather. Hong Kong’s Hang Seng is also closed on Tuesday.

A slew of economic stimulus measures has led to beaten-down Chinese stocks soaring, with the blue chip CSI300 rising 25 percent since the beginning of last week as global investors prepare to stake bets on China again.

“I think we’re in for some choppy trade until US data comes to flow in,” said Matt Simpson, senior market analyst at City Index, noting volume is thin with Chinese markets shut.

Investor focus has been centered around the pace of rate cuts from the Fed after the US central bank kickstarted an easing cycle last month with a 50 basis-point cut.

Fed Chair Powell indicated on Monday the US central bank would likely stick to quarter-percentage-point cuts henceforth after new data boosted confidence in economic growth and consumer spending.

“This is not a committee that feels like it is in a hurry to cut rates quickly,” Powell said.

That led traders to price in 38 percent probability of a 50 bp cut next month, versus 53 percent on Friday, showed the CME FedWatch tool. Traders anticipate 70 bps of easing this year.

The shifting expectations around rate cuts bolstered the dollar, with the dollar index slightly higher at 100.77. The euro was steady at $1.11355.