Donald Trump's widely expected trade announcement avoids the reimposition of sky-high levies and allows officials from Washington and Beijing to continue talking into November to settle their standoff.

In an executive order, the White House reiterated its position that there are "large and persistent annual US goods trade deficits" and they "constitute an unusual and extraordinary threat to the national security and economy of the United States".

However, William Yang, an analyst at the International Crisis Group, said: "Beijing will be happy to keep the US-China negotiation going, but it is unlikely to make concessions."

With the president's tariffs set and talks with various trading partners ongoing, markets are now turning their focus back towards the possible economic outlook and the impact of Trump's trade war.

First up is the US consumer price index (CPI) later in the day, which could play a major role in the Federal Reserve's decision-making with regard to interest rates.

Bets on a cut have ramped up in recent weeks owing to signs that the world's number one economy is showing signs of slowing, with figures indicating that the labour market softened considerably in the past three months.

Expectations are for CPI to come slightly above June's reading, but analysts warned investors were walking a fine line.

"CPI is the storm front straight ahead. A soft number, and the market exhales. A hot number, and the stagflation whisper becomes the only language anyone speaks," said SPI Asset Management's Stephen Innes.

While there have been warnings that the tariffs will stoke inflation National Australia Bank's Ray Attrill said: "The larger tariff impacts... probably will not be felt until August/September, with firms now only gaining some clarity on the degree of reciprocal tariffs.

"The current profit reporting season has noted firms on the whole were waiting for greater clarity on final tariff rates before adjusting prices."

Also on the agenda this week are wholesale prices and retail sales, with the Fed's favoured gauge of inflation at the end of the month. Bank officials are then set to make their decision in the middle of September.

Forecasts are for a reduction at that gathering and one more before the end of the year.

Asia's rally was led by Tokyo's Nikkei 225, which soared around 2.8 percent to hit a record high of 42,983.34 on renewed optimism over the Japanese economy after officials reached a deal to avert the worst of Trump's tariffs.

The gains came as traders returned to work after a long weekend.

Hong Kong, Shanghai, Sydney, Seoul, Taipei, Mumbai, Jakarta and Manila also advanced.

Singapore and Wellington dropped.

- Key figures at around 0430 GMT -

Tokyo - Nikkei 225: UP 2.7 percent at 42,952.94

Hong Kong - Hang Seng Index: UP 0.1 percent at 24,929.34 (break)

Shanghai - Composite: UP 0.5 percent at 3,666.33 (break)

Euro/dollar: UP at $1.1619 from $1.1617 on Monday

Pound/dollar: DOWN at $1.3430 from $1.3435

Dollar/yen: UP at 148.43 yen from 148.12 yen

Euro/pound: UP at 86.51 pence from 86.47 pence

West Texas Intermediate: UP 0.2 percent at $64.11 per barrel

Brent North Sea Crude: UP 0.3 percent at $66.83 per barrel

New York - Dow: DOWN 0.5 percent at 43,975.09 (close)

London - FTSE 100: UP 0.4 percent at 9,129.71 (close)

dan/tym

NATIONAL AUSTRALIA BANK

INDEX CORP.

Dow