The dollar rose after jobless claims from the USA economy showed healthy reduction, fanning speculation about a rate hike from the Fed soon.
Mixed earnings from major USA banks, limp inflation figures from China and further declines in commodities also helped dampen the appetite for stocks and the dollar.
European shares snapped a three-day slide on the prospects of more central bank support.
Data on the world's two biggest economies hinted at disinflationary pressure due to flagging domestic demand with USA retail sales edging up a tiny 0.1 percent and producer prices falling 1.1 percent. The Japanese currency has risen about 1.6 per cent this week. The Aussie climbed to 0.7332 after the greenback plummeted and Australian unemployment unexpectedly fell.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.1 per cent. Japan's Nikkei gained 1.15 per cent, as the second successive fall in manufacturers' sentiment in Japan kept pressure on policymakers to do more. The FTSEuroFirst 300 index comprising of top European shares, was lower by 1.4%.
THE Australian dollar has hit an eight week high against a weaker U.S. dollar on diminishing hopes of a USA interest rate rise before the end of the year.
That rally in growth-linked currencies came after weak USA jobs data released earlier in October prompted investors to push back expectations for the timing of the Fed's first rate increase in nearly a decade to next year. It also makes importing items more expensive, therefore reducing the amount we bring into our economy from other nations.
USA interest rates futures implied traders see about a 1-in-4 chance the Fed would raise rates by year-end, according to CME Group's FedWatch programme.
The Commerce Department reported retail sales rose a mere 0.1 percent in September, half the increase expected by analysts, and revised down August's reading to zero percent from a 0.2 percent rise previously reported.
The dollar edged down against the yen to 120.11 yen and was 0.1 percent lower against the euro at $1.1370, just off Friday's three-week high of $1.13875, having beaten back a push towards $1.14. The metal last traded at $1 164 an ounce, off a high of $1 166 touched earlier.
Expectations of more Iranian supply following a nuclear deal and concerns that economic worries in China and Europe will weigh on demand have pressured oil this month.
West Texas Intermediate crude fell 25 cents to $46.40 United States a barrel, as investors absorbed the news about record crude inventories in the U.S. Platinum was last at $978/983, down $13, while palladium slipped $1 to $686/692 so far on Tuesday morning.
The Singapore dollar also rose 0.5 percent, to around 1.3950 to the us dollar after the country's central bank eased its monetary policy only slightly, less than a few players had expected.
