Eurozone: PMI, ECB and IFO- Danske Bank

Analysts from Danske Bank explained that next week the main events in the Euro area will be the European Central Bank meeting, PMI figures and the IFO expectations report. 

Key Quotes: 

“In the euro area, the preliminary PMI figures are due for release on Wednesday. Both manufacturing and service PMIs rose yet again in December, climbing to 60.6 and 56.6 respectively. Activity remains high in the euro area and we expect the PMIs to remain  at high levels. However, in line with the decline observed in IFO expectations in December, we believe January’s PMI will show a decline. We expect manufacturing PMI at 60.1 and service PMI at 56.2.”

“On Thursday, the German IFO expectations are released. As noted above, we saw a sharp decline in expectations from 111.0 in November to 109.5 in the December release, although the current situation indicator edged slightly upwards. In January, we expect the IFO expectations might take another step downwards to 108.9, while
uncertainty remains around the CDU/SPD coalition in Germany.”

“The January ECB meeting will be held on Thursday. Attention from financial markets will be on the timing of when forward guidance will be revisited on the back of the ECB’s December account which stated that the forward guidance ‘could be revisited early in the coming year [2018]’. We believe these changes will relate to the QE and not the forward guidance on policy rate early in the year. We expect no change in forward guidance next week, but only at the March meeting,”