China manufacturing data under the microscope, with Asian currencies braced for more bad news

China will release August’s official purchasing managers’ indices (PMI) for manufacturing and services on Tuesday

Traders are looking to Chinese factory data for clues on the global outlook after the world’s second-largest economy slowed more sharply than expected in July

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China’s key manufacturing gauge has fallen since April and a slide into contractionary territory could spur a rise in risk-off sentiment and hurt Asian currencies. Photo: Getty Images

Published: 10:27am, 30 Aug 2021Updated: 11:51am, 30 Aug 2021

From coronavirus risks to talk of a reduction in US stimulus, there is been no shortage of bad news for Asian currencies. An upcoming report on China’s manufacturing sector may add to the pressure.

Traders are looking to Chinese factory data for clues on the global outlook after the world’s second-largest economy slowed more sharply than expected in July.

The nation’s key manufacturing gauge has fallen since April and a slide into contractionary territory could spur a rise in risk-off sentiment and hurt Asian currencies.

Regional exchange rates have struggled to navigate the fallout from the pandemic, with the Thai baht falling over 8 per cent to lag all its Asian peers this year.

hina is contributing to this as seen in its recent data releases and this is likely to be echoed in the release of China’s August [purchasing managers’ index] data

Mitul Kotecha

Taiwan’s dollar and the Chinese yuan have proven to be more resilient, but even they could find it hard to extend gains as the outlook dims, according to TD Securities.

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