The dollar and yen rose against most major counterparts as concern trade friction between the U.S. and China will escalate and Europe’s debt crisis will dent growth supported demand for the safest assets. The greenback advanced after the U.S. Senate passed legislation punishing China for its undervalued currency. The euro declined before a report on industrial production that may indicate a slowdown in Europe. The pound maintained yesterday’s loss versus the dollar before data forecast to show U.K. unemployment claims increased for a seventh month. Indonesia’s rupiah declined for a fourth day after yesterday’s unexpected interest-rate cut by the nation’s central bank. “Relations between the U.S. and China may worsen, leading to a trade war that could slow down the global economy,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “The bias is definitely for risk aversion and for buying the dollar and the yen.” The dollar rose 0.2 percent to $1.3612 per euro at 12:52 p.m. Tokyo time. The yen added 0.1 percent to 104.41 versus the 17-nation euro. The greenback bought 76.70 yen from 76.65. The MSCI Asia Pacific Index of shares fell as much as 1.3 percent before trading little changed on the day. U.S. lawmakers voted 63-35 yesterday to approve a measure that would let companies seek duties to compensate for a weak Chinese yuan. Governments that undervalue their currencies and don’t take corrective action would face penalties, including increased dumping duties, a ban on federal procurement in the U.S. and ineligibility to receive financing form the Overseas Private Investment Corporation. China’s Call China called on the U.S. government and Congress to oppose the use of legislation to push for changes in yuan exchange-rate policies, according to a statement from the Chinese Ministry of Foreign Affairs on its website today. The euro slid versus its U.S. counterpart amid signs the region’s sovereign debt crisis is weighing on growth. Slovakia’s parliament yesterday failed to approve changes to Europe’s bailout fund, making the country the only member of the euro area that hasn’t ratified the retooled plan. Industrial production in the euro area probably fell 0.8 percent in August after increasing a revised 1.1 percent in July, according to the median estimate of economists in a Bloomberg News survey before today’s report. “We’ve long maintained a bearish outlook for euro,” said said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “Europe is clearly heading towards a recession. At the heart of this is a liquidity, solvency, and therefore, economic issue that needs to be resolved, and it needs to be resolved quickly.” Third-Worst Performer The euro has lost 3.2 percent in the past six months, the third-worst performer among the 10 developed-nation peers tracked by Bloomberg Correlation Weighted Currency Indexes. Italy will sell as much as 6.5 billion euros ($8.9 billion) of bonds due in 2016, 2018, 2021 and 2025 tomorrow. That sale comes before the country pays back 15.5 billion euros of floating-rate bonds due Nov. 1, Italy’s final bond redemption in 2011. The nation sold 9.5 billion euros of Treasury bills yesterday, the maximum set for the auction. The pound held yesterday’s 0.6 percent drop versus the dollar amid concern economic recovery in the U.K. is faltering. U.K. Unemployment Data Jobless benefit claims rose by 24,000 last month after gaining 20,300 in August, the Office for National Statistics is forecast to say today according to a Bloomberg survey of economists. Recent economic data out of the U.K. will provide “further justification” for the Bank of England to expand its asset purchasing program, according to BNP Paribas SA. “We do think that the easing in monetary conditions currently underway will eventually steer GBP lower,” strategists including Ray Attrill wrote in a report yesterday. The pound lost 0.1 percent to $1.5567. The currency has declined versus 15 of its 16 most-traded peers this month. The Indonesia rupiah headed for its longest losing streak in almost a month against the dollar as Bank Indonesia lowered its reference rate yesterday by 25 basis points to 6.50 percent The decision came after the central bank held its key rate steady for seven months. All 15 analysts in a Bloomberg survey had predicted that the rate would stay unchanged. “The rupiah is declining because of the rate cut,” said Bambang Eko Joewono, the Jakarta-based head of the global- markets division at PT Bank UOB Indonesia. The rupiah dropped 0.4 percent to 8,945 per dollar, according to prices from local banks complied by Bloomberg. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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