Inflation worries have weighed on global equities in recent weeks and lifted bond yields as traders price higher odds for central bank tightening.
This week's U.S. producer and consumer price reports are seen as a real test for those bets, with policymakers looking for further evidence that inflation pressures are continuing to cool.
Traders assign close to 60% odds for a quarter-point hike or a hold from the U.S. Federal Reserve on Wednesday of next week, while being all but certain of a quarter-point increase from the BOJ two days later.
Gold XAU= gained 1% to around $4,401 an ounce. GOL/
Euro and yen move ahead of central bank decisions
The euro EUR=EBS edged higher ahead of the European Central Bank's policy decision on Thursday, with markets widely expecting a hike amid inflationary pressures from the Iran war. The currency rose to a more than one-week high of $1.16493 earlier and was last up 0.1% at $1.16325.
The yen JPY=EBS strengthened towards the nearly seven-month high touched against the dollar on Tuesday as traders exited short positions in the Japanese currency. Expectations are building for faster Bank of Japan rate hikes and a potential rush of repatriation of Japanese capital.
The yen strengthened around 0.2% to 153.675 per dollar JPY=, edging back towards its high of 152.89 from the previous session. It had surged around 4% over the last five sessions, with hawkish comments from BOJ officials ostensibly initiating a move that then snowballed as breaks of key levels triggered additional buying, market players said.
Sterling GBP= was little changed at $1.3543. The Bank of England is due to announce its latest policy decision on Thursday of next week, with economists predicting the key rate will be on hold for the remainder of this year.
Oil tops $100 as Middle East conflict lifts inflation concerns
Brent crude prices surged past $100 a barrel on Wednesday, as an intensification of the conflict in the Middle East fuelled concerns about energy-driven inflation and sent European stocks to one-week lows ahead of several major central bank decisions.
Brent crude futures LCOc1 rose as much as 2.3% to a session high of $100.19, breaching the symbolic price level for the first time since July 24, after Iran said it fired ballistic missiles at a U.S. base in Jordan and both sides claimed to have attacked vessels.
Stock markets across the globe came under pressure as the latest surge in oil prices drove concerns that higher inflation will prompt central banks to keep monetary policy tighter for longer.
The pan-European STOXX 600 index .STOXX fell 0.7% by 0901 GMT, with economically sensitive industrial .SXNP and banking .SX7P stocks among the top decliners. .EU
U.S. stock index futures Escv1, NQcv1 were largely flat after the cash index .SPX sank 0.6% on Tuesday.
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