AUD and NZD weaker on Chinese data

Today's Highlights

Sterling up on Mark Carney's comments

AUD and NZD weaker on Chinese data

ECB decision today

Service sector PMI's awaited

FX Market Overview

If you can read this through the haze of Sahara dust, welcome to Thursday.

Wednesday saw a little bit of life being pumped into the Pound. Sterling has gained ground on comments from Bank of England governor Mark Carney who said that UK interest rates could rise even before the next election. To be fair, that is exactly what he said before in different words so I can't quite see the intrigue in his comments. But it does put the pound into positive territory ahead of this morning's Service Sector purchasing managers index. That is forecast to be similar or slightly better than last month's and any gains would definitely boost sterling.

We heard overnight that Australian retail sales dropped back to just 0.2% month on month growth in February. That was significantly down on January's 1.2% and below expectations. That was in line with the drop in imports and that, combined with zero export growth, allowed the trade surplus to widen to A$1.2 billion. We also had a speech from Reserve Bank of Australia governor Glenn Stevens. He warned that the labour market will get tighter in years ahead and that there is a looming problem with tax v expenditure which will have to be addressed.

Arguably, the Australian Dollar was more affected by data from China which showed a drop in confidence amongst non-manufacturing businesses. That doesn't bode well for Aussie exports.

And none of this data enhances New Zealand's opportunity to export to these markets. Hence, the New Zealand Dollar is weaker again this morning.

The rest of today brings the European Central Bank's dilemma on interest rates and QE budgets. With the clear and present danger of deflation in Europe, the ECB is caught between a rock and a very hard place. They will probably bottle out of interest rate cuts but they could consider further monetary expansion. The press conference at 12.30 GMT will be very interesting and the euro could well be very volatile. Automated orders will work well today.

From the US we get the service sector survey and the index is expected to be quite a bit better than last month. US Dollar strength in later trade is very likely if the actual figure matches the forecasts.

From Canada we get international trade data and, because 70% of Canada's exports go south to the US of A, that ties in with US data. Improvements in the US economy tend to create improvements in Canadian data and we will see if that is the case today. The forecast is for a slight up-tick in export business, so strength in the loonie is on the cards.

Away from the markets, perhaps social media has gone too far. One of Japan's leading yakuza syndicates, the Yamaguchi-gumi, has launched its own website. They are extolling the honour and chivalry of the gangster outfit in a bid to attract new members. This is the latest initiative by the group. Last year they launched a magazine with poetry and fishing tips in amongst the articles. I haven't read it but whether they mention extortion and people trafficking is not clear.