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Analysts at ANZ Bank summed up the data from overnight.

Key notes

  • Made in USA: The January ISM beat expectations, printing above 50 for the first time in six months. The index rose to 50.9 vs 47.8. New orders rose 4.4pts to 52.0, prices paid firmed (53.3 vs 51.7) and employment lifted a touch (46.6 vs 45.2). Export orders surged to 53.3 vs 47.3, the highest reading since September 2018, showing significant relief at the Phase One trade deal. However, China’s measures to contain the coronavirus are expected to weigh on demand, making it difficult for China to meet its Phase One purchasing targets. The agreement includes a clause that the two sides will consult if a natural disaster or unforeseeable event delays compliance. Chinese officials are reportedly hopeful that the US will agree to some flexibility.  
  • Made in Europe: In line with the modest improvement in the final French and German manufacturing PMI, the euro area’s final PMI was 47.9 vs the prelim 47.8 and up 1.3 pts from December. The EA data have improved. In January, EA manufacturing new orders rose 2.4 pts to 49.0 and new export orders rose 2.2pts to 49.5. Italy’s January manufacturing PMI lifted 2.7pts to 48.9, a much better-than-expected performance by Europe’s second largest manufacturer.