On Wednesday Asian stock markets were slowed as rising oil and Chinese factory prices added to worries that a hot US inflation reading could cause policymakers to lift interest rates.
The US crude futures rose 1 percent to a two-week high of US $84.97 a barrel in early trade, while the Brent futures made a one-week top of $85.35.
Factory gate prices in China have soared 13.5 percent year-on-year since October, beating forecasts and warnings of pressure on supply chains to global consumers.
The Nasdaq logged its first fall in a dozen sessions as the broadest index of Asia-Pacific shares outside Japan and Japan's Nikkei dropped 0.2 percent in the long rally, as well as a drop in Asia-Pacific shares outside Japan and Japan's Nikkei.
Consumer prices are expected to go up at 5.8 percent year-on-year and even dovish Federal ReserveFederal Reserve officials Neel Kashkari and Mary Daly have conceded that it is running hotter for longer than expected, according to US data due at 1330 GMT.
In a note from NatWest Markets strategists, I would imagine that now there is officially little doubt left within the Fed that risks around inflation are much more elevated than previously assumed.
On Tuesday, longer-dated bonds had rallied, flattening the Treasury yield curve, as investors seem to be wagering on hikes in the next year or so to squash 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. I would argue that a low CPI number wouldn't be enough to ease markets into thinking that the Fed will hold back. After touching a six week low of 1.4150 percent overnight, the benchmark 10 year yield went up by 2 basis points to 1.4626 percent in Asia hours.
The yen has gone to a one-month high, but traders favour safe havens on Tuesday.
The Japanese currency held there on Wednesday at 112.84 per dollar and risk-sensitive currencies such as the Australian dollar 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 the dollar will be sensitive to moves in the 2 -- 5 year part of the US Treasury curve.
He said that the dollar index would need a monthly US CPI print of 0.8 percent to break out of the top of the range of 94.50. The index was last at 93.997.
China's economic slow down is nagging on investors' minds, especially as a credit crunch seems to be spreading quickly through the giant property industry.
Bonds in the sector had suffered a new pounding 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. A survey in Japan shows that manufacturers' business confidence has fallen to a new seven-month low and Tesla stock is a bit of a gauge of retail investors' sentiment, turning wobbly.
The carmaker, which has been the poster-stock of the 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 are the main beneficiaries of the market turbulence, with gold up 3.5 percent in a week to $1,829 an ounce, andBitcoin hovering at $67,267 after hitting a record peak of $68,564 a day ago.