Sterling is sharply lower against dollar and Euro in early European session on a couple of bad news from UK's banking sector. Shares of Lloyds, UK's largest mortgage lender, fell 14% after news that it will join the government's Asset Protection Scheme and cede control to the government. Barclays is also believed to be negotiation some form of rescue package. HSBC is also sharply lower on concern over bad loans at the US unit.

Technically speaking, GBP/USD's break of 1.3956 support confirms short term bearishness and further decline could now be seen to retest 1.3503 low made in Jan. EUR/GBP is pressing key near term resistance at 0.9082 and decisive break will suggest that the cross has bottomed out at 0.8635 after correction from 0.9799 completed. Elsewhere, dollar index recovers strongly to above 89. But after all, correction from 89.62 might still extend further as long as this resistance holds.

Eurozone Sentix Investor Confidence fell to new low of -42.7 in March, much worse than expectation of -37.8. Switzerland's unemployment rate climbed from 3.3% to 3.4% in Feb as expected. Market's focus will remain on SNB's meeting this week. While the upper band of Libor is expected to be lowered somewhat, focus will also be on any announcement os quantitative easing programs.

Japan's current account turned to a deficit of 172.8B yen in January, the first deficit since 1996 and significantly lower than a deficit of 15.3B yen as market expected, compared with a surplus of 125.4B yen in the previous month. Exports slumped 46.3% yoy (December: -35.1%) in January while imports declined 31.7% yoy (December: -21.2%) during month. Japan's economic watch DI improved slightly to 17.3 in February from 17.1 in December and the trough of 15.9 in December. Although still in very low level, the reading indicated signs of stabilization.

Looking ahead, the US calendar is empty today. Canada's housing starts in February is anticipated to have plummeted further to 148.5K in February after falling to 8-year low in January. Rising unemployment rate and looming recession made buyers stay away from the property market.