(Bloomberg) — The dollar was weaker against most peers as investors weigh the chances of an interest-rate increase going into this week’s Federal Reserve meeting. Asian stocks tracked losses in Chinese equities after weak industrial production and investment reports underscored slowing growth.
The yen rallied with the euro, helping to drive Bloomberg Dollar Spot Index toward an almost three-week low, with traders and economists split on whether the Fed will boost borrowing costs for the first time since 2006. The MSCI Asia Pacific Index dropped with metals as the Shanghai Composite Index slid the most since Aug. 25. U.S. stock-index futures climbed with European shares. Corn rose.
“Trading will remain volatile ahead of the FOMC meeting,”
Bernard Aw, a strategist at IG Asia Pte in Singapore, said by phone, referring to the Fed Open Market Committee gathering.
“Sunday’s data reinforced concerns about China’s economy slowing down.”
Traders are holding odds at about 28 percent that the Fed will raise borrowing costs at its Sept. 16-17 meeting. Prospects for further stimulus and market reforms in China failed to prop up Asian equities Monday after the weak data showed five interest-rate cuts since November having little impact on the real economy. China also published plans to reform its state-run companies as it battles to meet economic-growth targets.

Currencies

The yen increased 0.3 percent to 120.17 per dollar, climbing against all 16 major peers as the slide in Shanghai equities kindled demand for havens.   The euro added 0.2 percent to $1.1356 by 8:16 a.m. in London.
Japan also reviews monetary policy this week. With the country’s economy struggling to gather momentum, 11 of 35 economists surveyed by Bloomberg see the central bank stepping up easing measures in October, while two are forecasting a move as soon as Tuesday.
The Aussie — regarded as a bellwether for Chinese sentiment given the two countries’ close trading links– erased early gains to trade little changed. The currency also weakened as Malcolm Turnbull said he will challenge Australian Prime Minister Tony Abbott for the leadership of the Liberal Party, saying he’d failed to provide the economic leadership the nation needs.
India’s rupee advanced 0.3 percent to lead emerging-market currencies higher. The first of India’s two main inflation gauges due Monday showed a deepening price drop, adding pressure on central bank Governor Raghuram Rajan to cut interest rates for a fourth time this year.
The yuan climbed 0.1 percent to 6.4031 per dollar in Hong Kong trading, after jumping 0.9 percent last week amid speculation China intervened in the market to prop up the offshore rate and align it more with the onshore one.
(For more news on currencies, see TOP FX.)

Stocks

The Stoxx Europe 600 Index advanced 0.9 percent after a gain of 0.7 percent last week. All but one of the 19 industry groups on the gauge were higher on Monday.
The MSCI Asia Pacific Index dropped 0.1 percent, erasing gains of as much as 0.4 percent. The Shanghai Composite dropped
2.7 percent, while the benchmark index for stocks in the southern city of Shenzhen plunged 6.7 percent, the most since Aug. 25.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong swung between gains and losses after capping its biggest weekly advance in five months on Friday. Brokerages were among the biggest drags on the so-called H-share index.
Chinese regulators fined four firms 178.5 million yuan ($28
million) for failing to adequately check clients’ identities, China Securities Regulatory Commission spokesman Deng Ge said at a briefing in Beijing on Friday. The Hang Seng Index also fluctuated.
Industrial output missed economists’ forecasts, while investment in the first eight months increased at the slowest pace since 2000. Authorities are faced with a juggling act that’s getting more complex by the month, as they seek to cushion the economic slowdown, support the stock market, stabilize the yuan and press on with reforms to give market forces a bigger role in allocating resources.
Japan’s Topix index dropped 1.2 percent as NTT DoCoMo Inc., the country’s biggest mobile carrier, slid 9.8 percent. Prime Minister Shinzo Abe said easing the burden imposed by mobile fees on Japanese households was an important issue.
Communications Minister Sanae Takaichi agreed to look into it, according to minutes of the country’s Council on Economic and Fiscal Policy. DoCoMo was the biggest decliner on the Nikkei 225 Stock Average, which fell 1.6 percent.
Standard & Poor’s 500 Index futures rose 0.6 percent, erasing a drop, after the U.S. equity benchmark capped back-to- back gains on Friday.
(For more news on stocks, see TOP STK.)

Commodities

West Texas Intermediate crude fell 0.2 percent to $44.53 a barrel, erasing earlier gains. WTI sank 2.8 percent on Friday, capping a weekly loss of 3.1 percent amid ongoing concern over a glut in the commodity.
Goldman Sachs Group Inc. helped stoke declines into the end of last week, saying that oil prices could slide to as low as
$20 a barrel as the global surplus is even bigger than they first estimated. Brent dropped 0.9 percent Monday to $47.70, after sinking 3 percent last week.
Industrial metals declined, with copper sliding 1 percent in London. Nickel, zinc and lead for three-month delivery on the London Metal Exchange dropped at least 1 percent.
Futures on wheat advanced 0.8 percent while those on corn added 0.9 percent. Contracts on soybeans due in November gained
0.9 percent. The U.S. corn harvest this year will be 13.585 billion bushels, down from an August estimate of 13.686 billion bushels, the U.S. Department of Agriculture said on Friday.

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