USD maintained a supportive tone after it rallied renewed safe haven demand as fresh U.S. fiscal cliff-hanger concerns were sparked as U.S. House Republicans cancelled yesterday's "Plan B" vote on the Budget. U.S. equity index futures went limit down overnight session in reaction to the news, while EUR-USD dropped to a three-day low of 1.3179 from 1.3225 before steadying in seasonally quiet trade around the 1.3200 level. JPY was the outperformer, which left USD-JPY close to 84.00, despite BoJ signals that the it might adopt an inflation target in the near future. However, the Japanese currency has perhaps been due for a correction after quiet a big bear run over the last two months. GBP was little changed close to 1.6250 and barely reacted to the downward revision to U.K.Q3 GDP to 0.9% q/q from 1% previously. Overall, trade was extremely quiet ahead of next week's Xmas holidays. Focus will remain on the U.S. fiscal cliff in the North American session.

[EUR, USD]
EUR-USD steadied in Europe around the 1.3200 after dipping to a three-day low of 1.3179 during the Asia session. The 1.3175-80 is a technical support zone, comprising a minor trend support line and the previous trend peak that was made on Dec-14. Sell stops are reported under 1.3170, though order books are pretty thin and books fairly square into the Christmas and New Year period. The main focus into the new year will be on the fiscal debate in the U.S., though there is a final flurry of U.S. data still to come.

[USD, JPY]
The JPY has steadied after recovering some of its recent losses today, a move that was sparked by risk aversion following the latest impasse in the U.S. fiscal cliff-hanger saga. The news yesterday that the BoJ signalled that it will review its 1% inflation target in favour of a 3% target at its next policy meeting in January had caused the yen to weaken, but Japanese currency had perhaps been ripe for a rebound after quite a big bear run over the last two months. USD-JPY dropped below 84.00 earlier, though has since recovered that handle and a consolidation pattern looks set to persist through to the new year. EUR-JPY logged a three-day low to 110.29 during the Asia session, and has since recovered above 111.00. The seasonally thin market exacerbated the moves today, and there was a lack impetus to follow-through. . Yen bears have placed USD-JPY orders from 83.90 to 83.60, but movement on the topside now should meet good sell-interest from 84.40, where Japanese banks are holding good orders.

[GBP, USD]
Cable was relatively stable just shy of the 1.6250 area after U.K. final Q3 GDP, Q3 current account data and the latest monthly government borrowing data. Growth was downgraded a notch to 0.9% q/q, while borrowing came in worse than expected. The data completed the run of data out of the U.K. this week that reaffirmed the U.K. economic picture of sticky inflation, anaemic GDP performance and a government falling behind its fiscal targets. GBP, a former leader in the currency race to the bottom, has been perky of late, but we don't expect this to last amid the risk of a sovereign downgrade and possible extra boost of BoE QE on the cards for 2013. On an intra-day basis we expect offers from 1.6280 to 1.6310 to cap, while support is noted from 1.6220 to 1.6200. Stops under noted though this levels, but there are better bids from 1.6180.

[USD, CHF]
USD-CHF edged back over 0.9150 overnight as the move to dollar safety dollar fueled buyers from 0.9110-20. Furthers gains were limited by offers from 0.9170 and there are larger orders at 0.9200 that were added on the way down in the recent bout of dollar selling pressure. The technical back does still point to a test of early May lows around 0.9050 and then the 0.9000 area from late April. However, since the break lower late last week movement has been more patchy as fiscal cliff negotiations and thin year-end trade limits directional bias.

[USD, CAD]
USD-CAD broke up through 0.9900 as a risk-off tone reinforced the recent rebound. The move in Asia came on low volumes and early European names carried it towards 0.9910. There are light natural orders from 0.9915-20 and better sell-interest at 0.9930, which could attract if equity markets add to overnight losses. On the downside buyers are still camped around the 0.9850 region and towards 0.9830, which are protecting sell stops below.