HONG KONG – Asian shares tracked lower on Thursday, in step with Wall Street's losses, as even the prospect of a less aggressive Federal Reserve has still set the US central bank on a path for interest rates to stay higher for longer.

The dollar rose overnight after the Fed's July minutes pointed to a steady course of rate hikes ahead.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.22 percent, after US stocks ended the previous session with mild losses. The index is up 1.3 percent so far this month. Hong Kong's Hang Seng Index was down 0.45 percent.

The Federal Reserve's minutes for its July meeting showed it was contemplating paring back the pace of future rate hikes in line with a slowdown in inflation but saw "little evidence" yet that pressures were easing.

Investors interpreted the minutes as a sign the US tightening cycle could be less aggressive than forecast but showed Fed policymakers committed to raising rates till prices come under control.

"Stocks were volatile as traders assessed the latest Fed meeting minutes, which showed that the central bank would continue its aggressive hiking campaign until it can tame inflation," Ord Minnett analysts wrote in a research note.

"At the same time, the Fed also indicated that it could soon slow the speed of its tightening, while also acknowledging the state of the economy and risk to the downside for gross domestic product growth."

The yield on the benchmark 10-year Treasury notes rose initially in Asian trade but later retreated to 2.8749 percent compared with its US close of 2.895 percent on Wednesday.

The two-year yield, which rises with traders' expectations of higher Fed funds rates, stood at 3.2681 percent compared with a US close of 3.295 percent.

Higher yields helped strengthen the dollar which rose following the release of the minutes. However, in early Asian trade, the dollar index gave up some of the overnight gains and was down 0.05 percent to 106.58.

The US dollar index, which measures the dollar against a basket of six major currencies, is up about 0.8 percent this week – putting the brakes on a pullback that began about a month ago.

"The US dollar got back onto a rallying tack … and did so with some force, making this week's gains sizeable," CBA analysts wrote.

"The world economy broadly looks to be a slower growing place, favouring the greenback."

On Wednesday, the Dow Jones Industrial Average fell 0.5 percent to 33,980.32, the S&P 500 lost 0.72 percent to 4,274.04 and the Nasdaq Composite dropped 1.25 percent to 12,938.12.

The dollar rose 0.04 percent against the yen to 135.06. It is still some distance from its high this year of 139.39 on July 14.

US crude dipped 0.64 percent to $87.53 a barrel. Brent crude was down 0.52 percent to $93.16 per barrel.

Gold was slightly higher. Spot gold was traded at $1763.4532 per ounce.