European growth risks continued to reverberate after poor production numbers in Germany and the U.K. left USD on the front foot ahead of today's U.S. NFP release. EUR added to Thursday's losses through 1.2950 in early Europe after the Bundesbank downgraded the growth outlook from 1.6% to 0.4% for 2013. Cable dipped under 1.6030 as U.K. data reinforced expectations of a triple-dip recession and further QE from the BoE. The rest of the FX majors experienced relatively narrow ranges. There was a minor USD-JPY wobble after Japan experienced an earthquake measuring 7.3 on the richter scale, but no injuries were reported and it remained net unchanged from the European open at 82.40. The focus for North American markets will come from U.S. NFP data, while consumer sentiment and consumer credit data is due. In Canada, employment and productivity numbers are due for release. U.S. fiscal cliff developments will also be of interest, though at the moment it is looking as if it may go to the wire.

[EUR, USD]
EUR-USD moved under 1.2920 as eurozone growth risks fueled further losses. Fund names fished for stops through 1.2950 after the Bundesbank downgraded its 2013 growth forecast for Germany to 0.4% from 1.6% previously. Since the early EUR fall, topside movement is limited to 1.2940-50, while there is conjecture that EUR funded carry trades could also pick up after ECB hinted yesterday that a rate cut was discussed. ECB Chief Draghi said that lowering rates to stimluate growth may risk sparking currency depreciation pressures at some point, perhaps as a warning against the consequences of a negative deposit rate, though some commentators think that may be the tonic the eurozone needs. Buyers at the lows have been limited to profit taking amid oversold indicators on the hourly chart, but the daily picture points to further losses. Sell stops are likely through 1.2900, but the late November low at 1.2880 will be the bigger level.

[USD, JPY]
USD-JPY wobbled after an earthquake in Japan, which was measured at 7.3, but no injuries are reported and Fukushima nuclear plant was not impacted. The news tipped USD-JPY from 82.40 to 82.17, but Tokyo players bought the dip and it backed up to unchanged levels. The NFP data will be instrumental for intra-day action, but a sustained break of range may be a long shot given the pending FOMC risk and near-term Japanese election. Bids are layered from 82.00 down to 81.50, though there may be some weak stops mixed in. On the topside, hedging from corporate accounts and lifers is evident towards 82.60 and option positions are still live from 83.00. We still look for JPY to meet selling pressure on upticks, but think a drop off in market participation will limit action.

[GBP, USD]
Cable tripped stops after shocking U.K. data. Industrial production dropped 0.8% m/m and manufacturing production plunged 1.3% in October, which fueled macro fund selling pressure. Cable hit 1.6022 lows after 1.6030 sell stops were extinguished, but has backed up as it raised the prospects of further QE in early 2013. Near-term support includes a fibo level at 1.6015 and the psychological 1.6000 level, while sellers are now likely from early European highs around 1.6060 ahead of 1.6100 option strikes.

[USD, CHF]
EUR-CHF added to losses under 1.2100 as concerns over the eurozone growth outlook encouraged selling pressure. Local names are expected to buy dips into 1.2070-80, while USD-CHF maintains a default bid on general dollar strength around 0.9350. EUR-CHF corrected nearly of its gains from earlier in the week, which came amid CS and UBS charges for banks placing CHF deposits. SNB are expected to maintain the current policy stance at next week's policy review and have reiterated a strong desire to defend the lower limit in EUR-CHF at 1.2000. We think that rumours of capital control measures are unfounded as eurozone bond markets have stabilized from distressed levels earlier in the year.

[USD, CAD]
USD-CAD traded a tight range above 0.9900 after it was unable to sustain a move under 0.9900 on Thursday. Buy interest is layered to good support at November 7 lows of 0.9875, while dealers said offers were moved from the 0.9950 level to 0.9930. The focus for USD-CAD will come from a combination of November employment and U.S. NFP data, though as trade winds down into the year-end the likely of more range bound action is increasing.