The Australian dollar weakened on Thursday after data showed Chinese manufacturing activity unexpectedly faltered in August. The preliminary HSBC/Markit Purchasing Managers’ Index (PMI) fell to 50.3, below expectations and a sign of potential slowing in the world’s second-largest economy.

China is Australia’s largest trading partner, and weaker Chinese growth typically translates to reduced demand for Australian commodities, such as iron ore and coal. This, in turn, impacts the Australian dollar.

Analysts noted that the data increased uncertainty about the strength of the Chinese economy. Some believe that further stimulus measures from the Chinese government may be necessary to support growth.

The Australian dollar fell against the US dollar following the release. The currency’s movement reflects market sensitivity to Chinese economic indicators and their potential impact on the Australian economy.