Forex Flash: European markets have a way to go – Deutsche Bank (Barcelona) - In Europe, “the market is much more ahead of the economy as our simple model suggests that equities are broadly pricing in a French, German and Euro-area PMI of 54.5, 56 and 54, respectively (against yesterday's flash manufacturing numbers of 42.9, 48.8, and 47.5).” notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank. This is all quite sweeping but in general the US economy is showing signs that it might be living up to some of the faith the equity market has recently shown in it whereas Europe still has a long way to go.

Indeed, “the liquidity and the benefit of the doubt will likely dominate in Q1 and market should generally be in decent shape. However, we do need to see Europe show more consistent and broad growth for European markets not to have a setback in Q2. The jury is still out on this and a steadily increasing Euro won't help.” The analysts add.