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Asian shares rallied in relief on Thursday while the dollar nursed losses after the world's most powerful central banker reassured investors that U.S. rates would fall this year, setting the scene for policymakers in Europe.

Japan's Nikkei reversed earlier gains and the yen jumped past the 149 per dollar level to the highest in a month as momentum builds that a move from the Bank of Japan to end negative interest rates could come as soon as this month.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, while Japan's Nikkei fell 0.8%, after hitting a fresh all-time high earlier in the session.

Japanese workers' nominal pay in January grew 2% from a year earlier, data showed, accelerating from a gain of 0.8% the previous month. In other news, Japan's major union won big pay hikes in 2024 wage talks. BOJ board member Junko Nakagawa said on Thursday the economy was moving steadily towards sustainably achieving the central bank's 2% inflation target.

On speculation that the BOJ could move this month, the dollar lost 0.5% to a one-month low of 148.61 yen.

Chinese blue chips rose 0.3% and the Shanghai Composite index gained 0.4%. Hong Kong's Hang Seng index was an outlier, down 0.3%. Traders are waiting for China's January-February trade data to gauge the strength of the world's second-largest economy.

Elsewhere, markets were higher, with Taiwan's share market hitting a record high, after Federal Reserve Chair Jerome Powell stuck to the script by saying the Fed still expects to cut rates later this year, even though continued progress on inflation "is not assured". [.N]

That kept bets of a rate cut in June alive at an 84% probability. Longer-term bond yields slipped, gold prices hit a record high and oil jumped.

"There was nothing particularly surprising within Fed Chair Powell's prepared monetary policy testimony to Congress  - which is pretty short in fairness – or the Q&A session," said James Knightley, chief international economist at ING.

"More data is required, but with more evidence of a cooling jobs market we still think they can cut rates from June."

Indeed, data showed U.S. private payrolls increased slightly less than expected in February, although the report does not have a strong correlation with the official non-farm payrolls report due on Friday.

For now, investors are looking ahead to the policy action in Europe. The European Central Bank is set to keep interest rates steady at a record 4.0%, but any messaging from policymakers that support a rate cut in June would be a relief to markets.

Futures are almost fully priced in for a first rate cut from the ECB in June, with a total easing of 88 basis points expected for all of this year.

In the currency markets, the broad weakness in the U.S. dollar has helped the euro break key resistance to a six week top of $1.0901, but a major chart level of $1.0916 weighed.

Treasuries were steady in Asia. The benchmark 10-year U.S. yield was flat at 4.1156%, having slipped 3 basis points overnight to 4.0790%, the lowest in a month.

Commodity prices rallied on a softer dollar. Gold prices were steady on Thursday at $2,148.76 per ounce after hitting a record high of $2,152.09 overnight.

Oil prices were mostly flat, having jumped 1% on Thursday. Brent rose 0.1% to $83.04 a barrel, while U.S. crude gained 0.1% to $79.24 per barrel. [O/R]

Bitcoin hovered near record highs at $66,153.