On Wednesday, Asian stock markets were becalmed as a result of the surge in oil and Chinese factory prices, adding to worries that a hot US inflation reading could cause policymakers to lift interest rates.
US crude futures rose by 1 percent to a two-week high of US $84.97 a barrel in early trade, while Brent futures made a one-week top of $85.35.
Factory gate prices in China have soared 13.5 percent year-on-year to October, according to data, beating forecasts and warnings of pressure on supply chains to global consumers.
The Nasdaq logged its first fall in a dozen sessions after the broadest index of Asia-Pacific shares outside Japan and Japan dropped 0.2 percent in and Overnight on Wall Street.
Consumer prices will be higher at 5.8 percent year-on-year, and even dovish Federal Reserve officials Neel Kashkari and Mary Daly concede that it is running hotter for longer than expected, according to US data due at 1330 GMT.
I would think that now there is officially little doubt left within the Fed that risks around inflation are much more elevated than previously assumed, according to NatWest Markets strategists.
Longer-dated bonds had rallied on Tuesday, flattening the Treasury yield curve, as investors seem to be betting on hikes in the next year or so to combat growth and inflation in the years to come.
A firm CPI read can add a bit more fuel to the flattening, according to NatWest analysts. But I would argue that a weak CPI number wouldn't be enough to ease markets into thinking that the Fed will hold back. The benchmark 10 year yield rose by 2 basis points to 1.4626 percent in Asia hours after it touched a six-week low of 1.4150 percent overnight.
The yen was one-month high because of the quiet of the currency markets on Tuesday, but traders preferred safe havens and lifted the yen to a one-month high.
On Wednesday, the Japanese currency held at 112.84 per dollar and risk-sensitive currencies such as the Australian dollar were under pressure, with the Aussie testing support at its 50 day moving average of $0.7374.
Chris Weston, head of research at broker Pepperstone in Melbourne said that the dollar will be sensitive to moves in the 2 -- 5 year part of the US Treasury curve.
He said that we need to see a monthly US CPI print of 0.8 percent to see the dollar index break out of the top of the range of 94.50. The index was last at 93.997.
The economic slowdown in China is nagging on investors' minds as a credit crunch seems to be spreading rapidly through the giant property industry.
Bonds in the sector had suffered a fresh pound on Tuesday, with the sell-off dragging in even investment-grade debts.
The market is driven by fear rather than rationale, according to analysts at J.P. Morgan. Valuations have factored in the worst case scenario. Other clouds are brewing, with a survey in Japan showing manufacturers' business confidence has fallen to a new seven-month low and Tesla stock, a bit of a gauge of retail investors' sentiment turning wobbly.
The carmaker, which has been the poster-stock of the thumping rally from pandemic lows, suffered its sharpest share price fall in 14 months on Tuesday, as traders brace for a possible sale from Elon Musk.
Gold andBitcoin have been the main beneficiaries of the market turbulence, with gold up 3.5 percent in a week to $1,829 an ounce and bitcoins hovering at $67,267 after hitting a record peak of $68,564 a day ago.