European bourses were set for a cautious start, with pan-region Euro Stoxx 50 futures down 0.15%, German DAX futures 0.06% lower and FTSE futures down 0.64% in early trade.

Following robust industrial output and retail sales data from China and higher U.S. factory production investors are focusing on the Fed’s policy statement due Wednesday, the first since Chair Jerome Powell announced an increased tolerance for higher inflation.

“The risk is if we see no new developments since his Jackson Hole shoutout, this could have near-term pressure on yields ticking up, gold and precious metals complex lower, dollar higher and general risk-off in U.S. equities,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets.

“If we do get a surprise on the accommodative side - we’ve gotten this a few times from smooth Jay (Powell) - then we could get the inverse of all that, including the next big structural break higher in gold.”

The Fed is due to make its statement at 1800 GMT Wednesday, followed by a news conference from Powell.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.4% higher. Australian shares gained 0.97% and Taiwan’s tech-heavy board added 1.02%.

However, Chinese blue-chips pulled back 0.62% as investors booked profits and as healthcare firms dragged on concerns over vaccine safety.

Japan’s Nikkei added 0.09% as Yoshihide Suga was voted in as the country’s first new prime minister in nearly eight years, and readied a “continuity cabinet”.

The Fed meeting comes as U.S. lawmakers remain at an impasse over a new stimulus package amid lingering concerns about the recovery of the world’s largest economy from the coronavirus pandemic.

“There is some expectation that with the U.S. Congress unwilling/unable to agree to a new fiscal package, monetary policy may need to step in to fill the void,” NAB analyst Tapas Strickland said in a note. “Accordingly markets will be focused on any changes to forward guidance and to any balance sheet adjustments.”

The Bank of Japan and the Bank of England announce their respective policy decisions on Thursday.

E-mini futures for the S&P 500 were up 0.06% on Wednesday after U.S. stocks ended off their session highs, with the Dow industrials closing little changed.

The S&P 500 gained 0.5% while the tech-heavy Nasdaq Composite rose 1.2%.

U.S. retail sales figures from August will also be in focus on Wednesday.

Separately, the World Trade Organization found on Tuesday that the United States had breached global trading rules by imposing multi-billion dollar tariffs in President Donald Trump’s trade war with China, a ruling that drew anger from Washington.

In the currency market, the yen touched a two-week high of 105.23 per dollar as traders bet on a more accommodative Fed, and was last at 105.31.

The euro was barely lower at $1.1844, and the dollar index, which tracks the greenback against a basket of six major rivals, softened slightly to 93.070.

The yield on benchmark 10-year Treasury notes was at 0.674%, from Tuesday’s close of 0.679%.

In contrast to the muted activity elsewhere, oil prices jumped as a hurricane disrupted U.S. offshore oil and gas production and as U.S. stockpiles fell.

Global benchmark Brent crude rose 1.43% to $41.11 per barrel and U.S. West Texas Intermediate crude jumped 1.65% to $38.91 a barrel.

Spot gold gained 0.2% to $1,959.72 per ounce.