Euro Steadies Ahead of Services ISM

Swiss retail sales rose; Eurozone retail sales grew m/m but remained unchanged y/y; Eurozone PMI composite and services both revised lower; UK PMI services lower; new highs for ECB deposits. Market turns to factory orders and US ISM non manufacturing. Both AUDUSD Premium longs are filled. See below for more details.

USD is mixed in the ongoing session. It trades stronger against commodity currencies, unchanged against EUR, GBP and CHF and weaker against JPY. European equities are lower by about 1%. The relative strength winner is JPY while CAD and NZD lag.

Commodity currencies are under pressure after China lowered its GDP growth goal to 7.5% from previous 8% suggesting lower exports and therefore lower demand for commodities. Despite the lower target for growth, the inflation target remained at 4%.

Annual Swiss retail sales jumped 4.4% in January from previous 1.7%. EURCHF has been trading within a narrow range since the end of January and it currently trades around 1.2060.

Eurozone retail sales grew 0.3% in January from previous -0.5% m/m and remained unchanged y/y. Significant discounts contributed to the rise but consumer spending is likely to remain under pressure given the rising unemployment and elevated energy and food prices. Furthermore, retail sales in Germany, the biggest Eurozone economy, fell 1.6%.

Other European reports included Eurozone February PMI composite which was revised to 49.3 from initial 49.7 and PMI services which was revised to 48.8 from 49.4. Sentix investor confidence improved slightly to -8.2 from -11.1.

In the UK, PMI services declined to 53.8 from 56 in February and the business expectations component rose to 12 months high. Continued expansion of the dominant sector increases chances that the UK will be able to avoid a recession. EURGBP trades slightly lower at 0.8330.

ECB deposits reached a record high at EUR 820.82 bln on Friday.

The US session will bring January Factory orders that are seen lower at -1.5% from previous 1.1% growth and ISM non manufacturing that is expected to print 53.2 in February, marginally lower than January's 56.

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