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It’s the third week of the month, and y’all know what that means! Time to look at the flash PMI readings from the euro zone’s top economies. Will these disappoint again?

Flash PMI reports (Feb. 21, starting 8:15 am GMT)

It’s no secret that market watchers are wary of a slowdown in the euro zone as PMI readings from the heavyweights like Germany and France have been coming in the red in the past months.

For instance, the French flash manufacturing PMI has disappointed for four out of the last five months, only seeing a reprieve in January when it landed back above the 50.0 level. This February, the reading is slated to dip from 51.2 to 51.0 to reflect a weaker pace of industry expansion.

The French flash services PMI could fare a bit better since it is projected to improve from 47.8 to 49.1, still indicating industry contraction but at a slower pace. Keep in mind, however, that three out of the last five months saw weaker than expected results.

Over in Germany, the flash manufacturing PMI is expected to climb from 49.7 to 50.0 while the services PMI could dip from 53.0 to 52.8. The former’s track record ain’t so impressive either as the index has been sliding since September last year.

Overall, the euro zone’s flash manufacturing PMI for February could fall from 50.5 to 50.3 while the services PMI is projected to climb from 51.2 to 51.5. Another round of disappointing figures could reinforce the view that the ECB isn’t likely to tighten in the foreseeable future.

Risk sentiment & dollar action

As in the previous weeks, the euro and the franc could stay sensitive to market sentiment, which has mostly been dictated by trade tensions lately.

In particular, an increased likelihood of the U.S. imposing more auto tariffs on China could wind up hurting the shared currency while lifting the dollar simultaneously. Then again, not a lot of folks expected escalating tensions in trade talks over the next few days.

Should the dollar stay on weaker footing on account of last week’s retail sales letdown, the franc might be in a better position to take advantage of risk-off flows.

Missed last week’s price action? Read the EUR & CHF price review for February 11-15!