– China’s HSBC flash PMI rose to a 24-month high
– South Korea’s GDP surprised weak
– Euro area PMIs likely sideways
What to watch for today
EUR: PMI surprise risk? Our economists expect a sideways performance from the flash PMI data in January, with the manufacturing indicator up from 46.1 to 46.5, services unchanged at 47.8 and the composite headline marginally higher from 47.2 to 47.5. While market consensus is set for a reading in line with our views, we note that the upside surprise in the Zew survey on Tuesday might have geared market expectations in favor of an above consensus print. A reading in line with our expectations would therefore be viewed negatively and lead to weaker performance in risky assets, especially in currencies geared to growth in Europe. We overall remain bullish on EURUSD and expect the pair to trade up to 1.40 in three months.
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