Over the weekend, China released its Manufacturing PMI for August 2025, recording a figure of 49.4, slightly below the expected 49.5. The Services PMI matched expectations at 50.3. Today’s focus shifts to the private manufacturing PMI survey from S&P Global, which is anticipated to indicate continued contraction.
US Tariffs and Economic Calendar
In other developments, a US Federal Appeals court has deemed most of Trump’s tariffs illegal, though the legal process is ongoing. This event coincides with today’s economic calendar in Asia that features several key events and consensus expectations.
Monday’s agenda includes a snapshot from the investingLive economic data calendar, with all times listed in GMT. The calendar details both past results and consensus expectations for economic indicators from the previous month or quarter.
Lastly, a general risk warning highlights the high-risk nature of foreign exchange trading, with emphasis on the potential for losing more than the initial investment. The text advises investors to consider their investment objectives and seek independent advice. investingLive clarifies that it does not provide investment advice and disclaims liability for any potential losses from reliance on its content.
Given China’s manufacturing data has again dipped into contraction at 49.4, we should anticipate continued weakness in commodity-linked assets. For derivative traders, this suggests looking at buying put options on the Australian Dollar or selling copper futures. Historically, we have seen that when China’s PMI stays below the 50 mark for consecutive months, industrial metal prices tend to correct by 5-8% within the following quarter.
Impact of Tariff News
The US court ruling against Trump’s tariffs is a major development that injects significant uncertainty into the market. While the legal fight isn’t over, the prospect of tariffs being removed is disinflationary and could boost corporate profits for importers. We should consider buying call options on retail sector ETFs, as these companies would be immediate beneficiaries of lower import costs.
This tariff news creates a complex picture for the US dollar and Fed policy. If tariffs are eventually struck down, it could ease inflation, giving the Fed more flexibility and potentially weighing on the dollar. Based on analysis from the early 2020s, those tariffs added roughly 0.5% to headline inflation, so their removal would be a noticeable event for the bond market and currency traders.
The political pressure on Fed Chair Powell, combined with the major tariff news, suggests volatility will likely rise in the coming weeks. We believe buying protection through S&P 500 put options or purchasing VIX call options is a prudent way to hedge existing long positions. This strategy allows us to stay in the market while capping our downside risk from any sudden shifts in policy or legal outcomes.
With the crucial US Non-Farm Payrolls report due this week, we expect sharp moves, especially in currency pairs like USD/JPY. The combination of weak global manufacturing data from China and potential policy shifts in the US creates a difficult environment for picking a clear direction. Therefore, using options strategies like straddles on major indices to trade the expected spike in volatility around the data release could be more effective than taking an outright directional bet.
