Jan 27 (Reuters) - A look at the day ahead in Asian

markets.

A big week for world markets kicks off in Asia on Monday with

investors still navigating the blizzard of headlines around U.S.

President Donald Trump's likely economic agenda, while trying to

gauge whether the "U.S. exceptionalism" narrative may be losing

its luster.

The dollar fell 1.8% last week, its worst week since

November 2023. If the greenback is consolidating, it shouldn't

really be a surprise - it hit a two-year high earlier this month

and hedge fund net 'long' position was the biggest in nine

years.

The dollar and U.S. stocks have been closely correlated,

lifted by the huge wave of global capital inflows as investors

bet heavily on the American AI, tech, growth and returns boom.

But if the dollar's slide is a sign that the "U.S.

exceptionalism" flame is starting to flicker, is Wall Street

primed for a cooling off period too?

The S&P 500 hit a new high last week and the Nasdaq came

close. Index levels are historically high, valuations are

stretched, and big event risk looms this week in the shape of

the Fed's policy meeting and 'Big Tech' earnings.

Scrutiny on U.S. tech is intensifying as ripples from a

Chinese AI startup called DeepSeek spread. DeepSeek recently

launched a free, open-source AI model it claims is at least the

equal of more established models like ChatGPT on many levels,

but built at a fraction of the cost.

It's early days but if this shines a critical light on the

huge sums being spent on AI by U.S. tech firms, Wall Street

could wobble.

The Asian calendar on Monday is dominated by China's

'official' manufacturing and service sector purchasing managers

index reports for January.

A Reuters poll suggests the manufacturing PMI will be

unchanged from the previous month at 50.1. On the one hand, that

would represent the fourth straight month of expansion in the

sector. It would also indicate almost no growth at all for the

second month in a row.

Data on Friday showed Chinese state-owned firms' profits

last year virtually evaporated, rising only 0.4% on the previous

year. Wider industrial sector profits figures are due this week,

perhaps as early as Monday, and are expected to confirm that

2024 was the worst year in decades.

Investors will give their second day verdict on Friday's

Bank of Japan's rate hike. The initial take seemed to be that it

was a 'hawkish hike', but Japanese money markets are still

pricing in only another 25 basis points of tightening this year,

unchanged from pre-Friday levels. This suggests BOJ guidance was

actually pretty neutral, and Japanese stock futures are pointing

to a strong rise on Monday.

Meanwhile, South Korean markets will be sensitive to the

news that prosecutors on Sunday indicted impeached President

Yoon Suk Yeol on charges of leading an insurrection with his

short-lived imposition of martial law on Dec. 3.

Here are key developments that could provide more direction

to markets on Friday:

- China 'official' PMIs (January)

- Japan leading indicator (November)

- Germany Ifo index (January)