Forex Market Review – Euro rebounds after retail sales data

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The euro was choppy against the dollar during the European trading session as a result of mixed data for the euro area. Initially, the euro was under pressure due to concerns ahead of the conclusion this week of the Greek PSI debt swap. Also the euro zone services sector PMI came in lower than expectations, to fall lower than January’s figure.

Other negative data was the euro zone sentiment indicator which remains in the negative zone for the eighth straight month, though improved slightly from the previous month but less than forecast.

Following from the disappointing PMI and sentiment data, retail sales data helped the single currency rebound, as the official euro zone sales data showed a jump by 0.3 percent in January, beating expectations for a 0.1 percent drop. This was the first increase in five months.

EURUSD opened the session at 1.3197 and fell to a low of 1.3159 to later bounce to 1.3233. Euro was flat against the pound, trading a range between 0.8327 and 0.8351.

Sterling rose against the dollar erasing some early losses after being boosted by better than expected U.K. service sector PMI. Although the data showed that the service sector, which is the biggest sector in Britain, expanded less than expected, the index is still above the 50 level which is expansion territory. GBPUSD rebounded from an early session low of 1.5785 to climb to 1.5868.

A broadly weaker dollar fell against the Swiss franc after Swiss retail sales data surprised markets and lifted the swissy. Retail sales in Switzerland beat expectations of a 2.0 percent increase, and jumped by 4.4 percent  in January, higher than the previous month’s 1.7 percent. USDCHF fell to 0.9111 from an early session high of  0.9161.

Yen trimmed some gains made earlier in the Asian session, to allow the euro and dollar to recover losses. After dropping over 1 percent in Asia, EURJPY hovered around a 106.91 low in early European hours before bouncing back up to 107.75. USDJPY rose from 81.14 to 81.44.