The dollar and yen added to losses as risk appetite held up on optimism over U.S. fiscal cliff negotations, while there are ongoing expectations of further Japanese policy stimulus. The Nikkei moved above 10,000, which underpinned USD-JPY ahead of 84.00. EUR and GBP were underpinned, but commodity bloc currencies AUD, CAD and NZD underperformed. Market positioning was a factor, along with macro fund demand for the EUR and GBP crosses since yesterday's N.Y. open. In Australia, RBA's Stevens said it wouldn't rule out FX intervention in exceptional circumstances, but not at this time. Meanwhile, the World Bank released its outlook for Asia for 2013 and upped its China growth forecast to 8.4% from 8.1%, previously.

[EUR, USD]
EUR-USD maintained a firmer tone above 1.3200 following yesterday's push higher over the London fix. Risk appetite encouraged follow through demand in Asia, with buyers noted around 1.3220 and it cleared another round of buy stops through 1.3250. Ambitious longs are targeting 2012 highs around 1.3490 by year-end, though near-term resistance for intra-day accounts lies at May-1 highs of 1.3284 and then another round of barriers from 1.3300.

[USD, JPY]
JPY continued to trade on the softer side ahead of tomorrow's BoJ policy outcome, where an increase in the asset purchase target is widely expected. The LDP is also expected to deliver a new budget to help boost economic activity. USD-JPY met ongoing demand on dips, which offset light exporter hedging. Bias is on option barriers from 84.50, while there was speculation of short dated 85.00 interest, where good size barriers are noted.

[GBP, USD]
Cable held firm around 1.6260-70 after it moved up through offers from 1.6220 to 1.6250 and tripped buy stops above on Tuesday. The intra-day picture is positive for Cable and dip buying is likely to continue in the near-term. Buyers are noted into 1.6200 and below, while on the way up option barriers will encourage some defensive selling.

[USD, CHF]
USD-CHF added to recent losses as the dollar came under further pressure amid a better risk backdrop. It extended through 0.9120 in Asia and is on course to test of early May lows around 0.9050 and then the 0.9000 area from late April. Natural demand should feature around 0.9100 and there is likely to be an options influence on dips. However, into the year-end price action may become disjointed and limit directional bias. Sellers are expected to use the 0.9170-0.9200 area for short term positions, while more resistance is tipped around 0.9220-30.

[USD, CAD]
USD-CAD extended to 0.9868 in Asia amid general repositioning by macro funds via the commodity bloc currencies ahead of year-end. Movement in CAD$ was mirrored by AUD and NZD, while a clear out of positions was also evident via precious and base metal prices yesterday and may have been a catalyst. Another round of equity market gains fueled a move back towards 0.9855 by early Europe, but bias is now on offers from 0.9880 to 0.9900.