The dollar was marginally lower in holiday thinned N.Y. trade on Monday, with activity generally muted. Aside from a weaker Empire State index, and October TIC flows, there was nothing much to drive markets. Stocks gained some altitude on the back of fresh (but largely uneventful) cliff talks between Boehner and Obama, which likely put some weight on the greenback. Aside from Q3 current account and December NAHB housing market data, the calendar on Tuesday is empty. We look for more listless trade overnight and tomorrow, as many are virtually done with trading until 2013.

[EUR, USD]
EUR-USD went nowhere ahead of the N.Y. options cut, where 1.3100 and 1.3150 maturities rolled off. A supranational account was noted as a buyer into 1.3150, which put a floor in place since the N.Y. open, while U.S. interbank was noted on top from 1.3170, which kept option related offers at bay ahead of 1.3200 barriers. We are in typical year end markets with liquidity at a premium and limited interest unless you are fortunate enough to have an order. Longs are still in play at current levels, but it may take a fresh injection of news to force short term accounts off the sidelines.

[USD, JPY]
The JPY was supported by profit taking following the LDP election victory. It is now likely that Japan will push on with various policy stimulus measures, which will include BoJ policy easing and a new Y10 tln draft budget. JPY is still expected to trend lower, but after an excessive build up of short positions and the gap at the Asian open short term accounts pared back positions. USD-JPY met option related offers into 84.50 and after chopping around 84.00 in London, filled in bids into 83.70-80. More buyers are rumored at 83.50, which could put a short term floor under the pairing.

[GBP, USD]
Cable traded a tight range close to 1.6200 through the N.Y. session after good Middle Eastern buying interest went through. After trading above 1.6200 in early Asia and early Europe there is limited follow through. Market interest has been patchy elsewhere due to a drop off in liquidity into year-end, but Cable is in territory where relatively good two-way flows are noted. Sovereigns have been active on dips in recent sessions, while U.S. and Asia accounts were noted between 1.6180 and 1.6190. Over 1.6200 there are offers placed from 1.6220 to 1.6250 that should keep ranges narrow.

[USD, CHF]
USD-CHF remains under pressure after it broke below the 0.9200 level after Friday's European close. It found natural demand in Asia ahead of 0.9150, but since Europe opened sellers have lined up orders into the 0.9190-00 area, leaving downside risk. Market sentiment remains positive, which sets up the dollar pairing for a test of early May lows around 0.9050 and then the 0.9000 area from late April. However, into the year-end price action may become disjointed and limit directional bias.

[USD, CAD]
USD-CAD eased under 0.9840, after opening over 0.9885. Equity and oil gains helped risk sentiment, which aided the loonie, though trade was said to be thin. Light stops were seen under the 50 level, though ongoing corporate demand slowed downside progress. Afternoon trade saw the pairing settle on either side of 0.9840, with about a 10 point range holding into the close.