Asian stocks edged lower on Thursday, while the dollar was on the back foot as investors remained cautious ahead of an expected 25 basis point hike in interest rates by the U.S. Federal Reserve next month.

Oil prices fell in Asian morning trade on Thursday as the U.S. dollar strengthened on rate-hike expectations and after recent economic data from the U.S. and China did not do enough to encourage expectations that demand will improve.

The U.S. dollar held gains on Thursday after strong U.S. banking results firmed up expectations that the Federal Reserve will keep monetary policy tight for a while longer, and New Zealand's dollar slumped after cooler than expected inflation data.

The dollar steadied on Wednesday after it seesawed with bond market volatility as investors scrutinised U.S. economic indicators, Federal Reserve commentary and corporate earnings for clues about the path for interest rates.

Stocks eased on Wednesday, while the dollar was under a little pressure, as traders shifted focus from U.S. banking stress to expectations for an imminent peak in the Federal Reserve's interest rate cycle.

British wages rose faster than anticipated last month, in a move that economists judge may tip the Bank of England towards a further rise in interest rates next month, despite an unexpected increase in joblessness too.