Asian stocks broadly fell on Thursday, hovering close to a one-month low, still reeling from China’s slip into deflation as investors looked ahead to a crucial U.S. inflation report that will likely influence the Federal Reserve’s policy path.

The announcement of a U.S. ban on investments in sensitive technologies in the world’s second-largest economy also weighed on sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.58% and looked set to log a second straight week of losses. A technology sub-index (.MIAPJIT00NUS) fell to its lowest in two months.

The dour mood in Asia is unlikely to continue with futures indicating that European stocks were set for a higher open. Eurostoxx 50 futures rose 0.69%, German DAX futures were up 0.70% and FTSE futures climbed 0.44%.

Investors have been unwilling to place major bets this week ahead of a U.S. inflation report due later on Thursday.

U.S. CPI is forecast to show headline inflation picking up slightly in July to an annual 3.3%, while the core rate, which excludes the volatile food and energy segments, is forecast to rise 0.2% in July, for an annual gain of 4.8%.

“We are likely to see something we haven’t seen for some time, namely, annual inflation rising,” said Rob Carnell, ING’s regional head of research, Asia-Pacific.

“The good news is that this is mainly due to base effects…the bad news is that this indicates that the going will be a lot heavier for inflation from now on, without those nice helpful base effects that dominated the second quarter.”

Markets are pricing in a more than 50% chance that the Fed is done with interest rate hikes this year, the CME FedWatch tool shows, as inflation moderates and the prospect of a soft landing increases.