The dismal manufacturing readings supported the dollar, which edged higher against a basket of currencies to 98.661. Sentiment was somewhat supported by confirmation that US-China trade talks will resume next month in Washington, though the overall mood remained subdued given the global growth woes. "Broad environment remains mixed for the Asian currencies, with markets unable to shake off Chinese/global growth concerns but trying to draw optimism from the Sino-US trade front," an OCBC note said.
The Indian rupee firmed 0.2%, up for a third straight session supported by recent corporate tax cut measures and easing oil prices. The Taiwan dollar also advanced 0.2% after data showed the country's August industrial output had risen 2.3% from the previous year. The yuan strengthened a touch but remained locked in tight ranges as investors awaited the outcome of the US-China trade talks. Earlier in the day, the country's central bank said that China is in no rush to follow other countries in significantly loosening monetary settings but has ample options to help prop up slowing growth.
The Thai baht lost 0.2% after weak manufacturing data bolstered the case for a rate cut in the near future. Thailand's manufacturing production index (MPI) in August dropped 4.4% from a year earlier, compared with a forecast of a 3.6% decline in a Reuters poll. The Bank of Thailand is due to release its rate decision on Wednesday with economists in a Reuters poll expecting it to leave its benchmark interest rate steady after last month's cut.
The dismal manufacturing data, however, has prompted some analysts to predict another rate cut in the near future. "If nothing else, such a move (easing) is warranted from the strength of the THB," ING analysts said in a note. The baht has strengthened 6.3% so far this year, as at Monday's close.