After a few sessions of light news, the flash Chinese Caixin flash manufacturing PMI and EMU PMIs provided new economic insight. But the macro-picture has not changed very much. China’s economy has not bottomed while European growth appears to remain largely steady.

Asian equities fell, following the US slide and the disappointing Chinese news, but after a soft start, European bourses turned higher. European bonds yields are mostly 2-3 bp higher. 

The euro is consolidating after approaching $1.11 in Asia. Key chart support is seen near $1.1080. The euro recovered toward $1.1150, with the help of ECB’s Nowotny, playing down the urgency of expanding or extending the asset purchase program. Draghi is expected to reiterate the flexibility of the current program before the European Parliament today, while the Bundesbank’s Weidmann can be expected to resist such notions when he speaks to a business association in Germany later today.  

Sterling can’t get out of its own way and extended its recent losses to poke briefly through the $1.53 level. The dollar fell to almost JPY119.60 in Asia but rebounded to JPY120.30 in the European morning. Of the majors, the Antipodean were hit the hardest on the weak Chinese data, while the Canadian dollar is faring better, perhaps with the help of firmer oil prices in the wake of the 3.7 mln barrel inventory draw down reported by API. 

The flash Caixin manufacturing PMI fell to 47.0 from 47.3. Many expected a small rise. The details were poor.  It is the lowest reading in the short history of this time series (6 1/2 years) and the seventh consecutive reading below 50. New orders fell to 46.0 from 46.7. Exports orders fell to 45.8 from 46.6.   There is some risk that the focus on small and medium Chinese companies means that the Caixin survey does not pick up the government support for the larger state-owned enterprises. That data will be released in a week’s time, ahead of the beginning of the holidays on October 1.  

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