Asian currencies likely to consolidate, even as data are expected to show continued weakness

Asian currencies are likely to consolidate following the stabilization in market sentiments. However, economic activity data from regional manufacturing economies are likely to show continued weakness, reflecting the effect of the slowdown in China and in EM in general. 

"We forecast China's official manufacturing PMI for August to deteriorate further due to weak production and new orders (Tuesday; Barclays: 49.2, consensus: 49.7)", notes Barclays.

Korea's July IP (Monday) is expected to slip to -2.0% y/y from 1.2% last month (consensus: -1.3%), while August exports (Tuesday) are likely to weaken further, to -7.4% y/y from -3.4% in July (consensus: -5.8%). India's Q2 GDP, however, is likely to show a gradual recovery, rising to 7.8% y/y, from 7.2% in the previous quarter.  CPI reports for Korea, Philippines, and Thailand are likely to show a moderation in headline inflation due to the recent fall in oil prices. In contrast, Indonesia's inflation (Tuesday) is likely to tick up to 7.4% y/y (consensus: 7.2%) due to the weaker IDR driving up import prices. With inflation remaining sticky, BI is expected to continue to intervene to slow the slide in the IDR.