Asian session: The yen strengthened

The yen strengthened against most of its 16 major counterparts as signs of a global economic slowdown boosted demand for safer assets. Japan’s currency gained for a third-day against the dollar before U.S. data this week forecast to show factory activity and hiring remained weak. The Institute for Supply Management’s manufacturing index was probably at 50 in August, according to the median estimate of economists surveyed by Bloomberg News before the Tempe, Arizona-based group releases its figures tomorrow. It was at 49.8 in July, below the level of 50 that marks the dividing line between expansion and contraction.

Demand for the greenback was limited after Federal Reserve Chairman Ben S. Bernanke said last week that a third round of bond purchases, or quantitative easing, shouldn’t be ruled out. Bernanke told central bankers and economists at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming that “nontraditional policies” shouldn’t be ruled out if economic conditions warrant them. Speaking on Aug. 31, he emphasized that a new round of bond purchases is an option, and repeated the Federal Open Market Committee’s last statement that the central bank “will provide additional policy accommodation as needed” to spur growth.

Australia’s currency fell to a five-week low after the nation’s retail sales unexpectedly declined and a private report showed China’s manufacturing contracted. Australian retail sales declined 0.8 percent in July from the previous month, the government said today. That compares with the 0.2 percent gain predicted in a Bloomberg survey.

EUR/USD: during the Asian session, the pair traded in the range of $1.2555-85.

GBP/USD: during the Asian session the pair fell to $ 1.5850.

USD/JPY: during the Asian session the pair fell to the Friday's low.

European data starts at 0700GMT with car registrations data from France, but data also includes the final manufacturing PMI data from the main European states for July. This includes Spain at 0713GMT, Italy at 0743GMT, France at 0748GMT, Germany at 0753GMT and the main EMU data at 0758GMT. US markets remain closed for the Labor Day holiday on Monday. The UK releases the Markit/CIPS Manufacturing PMI at 0830GMT.