(Bloomberg) — Asian stocks advanced Tuesday, led by Japanese equities, while the yen steadied after weakening against the dollar over the past week.

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Japanese stocks rose alongside Hong Kong equity futures, while shares in Sydney were little modified. US contracts edged lower ahead of Wall Street reopening later Tuesday, following the Labor Day public holiday.

The yen was barely higher after weakening against the greenback Monday, amplifying its decline over the past week.

The Japanese currency will remain weak for “an extended time to come back,” given the differences in rates of interest between the US and Japan, in keeping with Mark Matthews, head of Asia research for Julius Baer.

“Our assumption is that the Bank of Japan policy rate will probably be half a percent by March next yr and the fed funds rate will probably be 4.5% — that’s still 400 basis points of difference, which could be very wide,” Matthews said in an interview on Bloomberg Television. “On that basis we do see the yen weakening.”

Traders in Asia will probably be keeping a detailed eye on fresh signs of economic troubles in China. Data on Saturday showed Chinese factory activity had contracted for a fourth straight month in August, the newest signal that the world’s second-largest economy may struggle to satisfy this yr’s growth goal.

The slowdown in China has highlighted the urgency of fresh government stimulus, while inventories of key raw materials from steel to soybeans are piling up within the nation’s warehouses — evidence that economic activity stays too feeble to clear surpluses.

While traders globally will approach this month with caution, as data shows September has been a poor month for stocks in recent times, the upcoming US jobs report on Friday could possibly be an element as as to whether history repeats itself. It should provide crucial insights into how quickly or slowly the Federal Reserve might cut rates and because the US election campaign gets into full swing.

Traders are pricing a begin to the US easing cycle this month, with a roughly one-in-four likelihood of a 50 basis-point cut, in keeping with data compiled by Bloomberg. The equity market rally could stall even when the Fed initiates a rate cut, JPMorgan Chase & Co. strategists cautioned, as any policy easing can be in response to slowing growth, while the seasonal trend for September can be one other impediment, the team led by Mislav Matejka wrote in a note.

“We usually are not out of the woods yet,” Matejka said, reiterating his preference for defensive sectors against the backdrop of a pullback in bond yields. “Sentiment and positioning indicators look removed from attractive, political and geopolitical uncertainty is elevated, and seasonals are more difficult.”

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Jobs data potentially pointing to a really gradual cooling down of the US labor market may lead traders to regulate their expectations for rate cuts to the good thing about the dollar, in keeping with to Valentin Marinov, head of G-10 FX strategy at Credit Agricole CIB.

“The markets could also be leaning too dovish into the September Fed meeting,” Marinov said on Bloomberg Television. “The dollar could recoup some ground once the markets realized that the Fed will move more cautiously.”

In commodities, oil edged higher after Libya declared force majeure at a key oilfield amid widening shutdowns which have worn out near one million barrels from day by day global supplies.

Key events this week:

• Switzerland GDP, CPI, Tuesday

• US construction spending, ISM Manufacturing index, Tuesday

• Australia GDP, Wednesday

• China Caixin services PMI, Wednesday

• Euro-zone HCOB services PMI, PPI, Wednesday

• Fed’s Beige Book, Wednesday

• Eurozone retail sales, Thursday

• Germany factory orders, Thursday

• US initial jobless claims, ADP employment, ISM services index, Thursday

• Euro-zone GDP, Friday

• US nonfarm payrolls, Friday

Among the fundamental moves in markets:

Stocks

• S&P 500 futures were little modified as of 9:30 a.m. Tokyo time

• Hang Seng futures rose 0.1%

• Nikkei 225 futures (OSE) rose 0.4%

• Japan’s Topix rose 0.6%

• Australia’s S&P/ASX 200 fell 0.2%

• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little modified

• The euro was little modified at $1.1068

• The Japanese yen was little modified at 146.88 per dollar

• The offshore yuan was little modified at 7.1170 per dollar

Cryptocurrencies

• Bitcoin rose 0.2% to $59,131.03

• Ether fell 0.8% to $2,534.33

Bonds

Commodities

• West Texas Intermediate crude rose 0.5% to $73.90 a barrel

• Spot gold fell 0.1% to $2,496.58 an oz.

This story was produced with the help of Bloomberg Automation.

–With assistance from Jason Scott.

(An earlier version corrected the date that Chinese factory data got here out.)

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