Asian equities tumble broadly in response to weak China data, which also drags down Aussie and Kiwi. At the time of writing, China Shanghai composite is losing -60 pts or -1.85%. Hong Kong HSI is dropping -600 pts, or -2.8%. Japan is still on holiday. AUD/USD is trading at 0.702/3 for the moment after dipping to 0.7018 and is set to take on 0.7 handle. NZD/USD is also heading back to recent low of 0.6251. Overall in the currency markets, Yen is the strongest so far this week on risk aversion. That's closely followed by dollar as post FOMC rebound extends. Aussie and Kiwi turned to be the weakest one while Euro follows on talk of expansion of stimulus by ECB.
The Caixin China PMI manufacturing dropped to 47.0 in September, worse than expectation of recovering to 47.8. That's also the lowest reading in more than six years. And, the reading has been below 50 since March. Economists noted that growth momentum is weakening further in China. And, while the government might provide more fiscal and monetary stimulus, the structural weakening trend is not going to turn around any time soon. Earlier this week, the Asian Development Bank lowered growth projection for China for this year to 6.8%, down from March projection of 7.2%, and was below the government's target of 7.0%.
Looking ahead, Eurozone PMIs are the main focus in European session. Mild deterioration is expected in the regional and German PMIs. Though, France PMIs might post some improvements. Canadian retail sales will be the other feature of the day.