The dollar was mostly steady through the morning session in N.Y. on Wednesday, after losing ground overnight in the aftermath of the fiscal cliff vote. Equities soared at the open, and ultimately kept the bulk of their gains through the day. The dollar managed a modest recovery, as risk levels moderated, and as the impact from the cliff largely ran its course. There is still plenty of uncertainty in the markets vis a vis the U.S., where the country is bumping up on its debt ceiling, and as sequestration remains an issue over the next 2 months. EUR-USD peaked near 1.3280 in early trade, before easing back under 1.3160. USD-JPY meanwhile, was steady on either side of 87.00 through the session. On the economic front, December manufacturing ISM was a bit better than expectations, while November construction spending fell back, largely due to impact from hurricane Sandy.

[EUR, USD]
EUR-USD ran into offers from 1.3280 and reverted to the 1.3250 area, where good size option expiries rolled off. U.S. rating downgrade rumors were used as an excuse to book profits. Range players have left orders around 1.3235 and more are likely where the 10-dma is around 1.3210. Later, the dollar rallied back against the euro, moving under 1.3160 on a round of profit taking. EUR-USD selling picked up steam under 1.3130, the London low, with some position paring likely prompted by the marginal pullback in equity gains. More stops were noted under 1.3170, just below last week's lows.

[USD, JPY]
After rallying in Asia on cliff developments, USD-JPY steadied in N.Y. dealings, moving between 86.95 and 87.25. Yen selling pressure on upticks is still likely in the near-term, but it has moved a long way of late due to Japanese policy risk and it may be due a small correction. Intra-day players are likely to buy into 86.80 and ahead of 86.50-60, while the upside is limited ahead of 87.50 barriers.

[GBP, USD]
GBP held steady after U.K. manufacturing PMI moved into expansionary territory to reach 15-month highs. The number was much stronger than expected, leaving Cable supported from 1.6320, where it started the European session. Overbought conditions on the hourly chart fueled a pullback from 1.6380 in Asia, which is also where option related offers were noted ahead of 1.6400 barriers. N.Y. trade saw the pairing pull back in afternoon dealings, falling under 1.6230, after opening over 1.6310. The pullback coincided with the dollar's gains versus the euro and CHF.

[USD, CHF]
USD-CHF found support under 0.9100 and posted a mild recovery to 0.9135 as profit taking went through. The pick up in risk appetite overnight reinforced the bearish technical backdrop, but once again movement under 0.9100 was disappointing due to a series of standing orders at 0.9080 to longer-term chart support at 0.9050-60 from early May 2011. The pairing eventually followed the dollar's uptick versus the euro, as risk taking levels abated somewhat, leaving USD-CHF close to 0.9200.

[USD, CAD]
USD-CAD was steady just under 0.9850 into late morning, after falling from near 0.9970 in Asia in the aftermath of the fiscal cliff vote. Sell stops were a feature at 0.9900 on the way down, though corporate bidding interest resurfaced under 0.9950. Solid support is seen into the 0.9825 region, which represents the December lows. Afternoon trade saw the pairing move back toward 0.9870, as equities came off their best levels, and as short covering stepped in.