The dollar traded broadly lower in N.Y. trade on Monday, despite the soured risk backdrop. Commodities and equities moved lower through the session, usually supportive of the greenback, though EUR-USD moved over 1.3100 from near 1.3025, as cable tested the 1.6100 level, and as the dollar bloc kept its bid tone. Concerns over the U.S. debt limit, and an apparent lack of progress over how to deal with sequestration could keep the greenback under some pressure in the near term. There was nothing on the economic calendar to drive prices, and overall, the FX market was a bit lackluster in its level of interest. Tuesday's calendar is also empty but for a three-year Treasury auction, so risk and headlines may provide direction.

[EUR, USD]
EUR-USD moved over 1.3060 as short term funds traded off a U.S. based think tank report, which said the ECB has raised the bar to cut rates and will leave policy unchanged unless there is a further downgrade to growth. Draghi left the door for further action in December and there were reports that the majority of council members supported a cut, but recent data releases have been stable and ECB are widely expected to keep rates unchanged. Nevertheless, the lack of trading impetus today from both Europe and the U.S. gave some intra day players an excuse to cover weak shorts. The pairing later touched 1.3119 highs, with fresh buying stepping in on the move over 1.3080. Option backed offers were reportedly sitting from 1.3100, while stops are not expected until above 1.3125.

[USD, JPY]
USD-JPY was choppy under 88.00, but held a narrow range in quiet trade. Large size 87.75 option maturities fueled two way flows, with buyers noted under 87.70 from the N.Y. open. There were light dollar buyers after USD-JPY held above 87.50 during the European morning and similar bargain hunters via the JPY crosses. Stale yen shorts took the opportunity to reduce positions through the session. A Nomura research piece that tipped profit taking was a catalyst in Asia. It believes that Japan policy changes are now fully priced in and the yen may not weaken much further, though Asian Development Bank's Kuroda still thinks JPY is overvalued in spite of the 12% drop on a trade weighted basis in the last three months.

[GBP, USD]
Cable continued to find support ahead of 1.6000, which reinforced expectations that the FX majors are in range trading mode. Buyers were noted from 1.6020 in early Europe just ahead of Friday's base after it pulled back from 1.6080 in Asia. The risk backdrop was restrained today, though the dollar nonetheless suffered some, and GBP-USD managed to trade up to just touch 1.6100.

[USD, CHF]
USD-CHF extended gains to trade at 0.9300 on Friday, which was its best level since December-12. The move was a symptom of the moderation in risk appetite as markets reassessed the U.S. fiscal cliff deal. Monday trade though, saw the pairing slip back toward 0.9210, as the dollar was pressured broadly in N.Y. trade. Despite the softer risk appetite, the greenback eased broadly, as the prospects for ECB rate cuts remained unclear.

[USD, CAD]
USD-CAD moved inside a 0.9860-85 trading band overnight, with few interesting flows reported. The risk backdrop was a bit soft in early dealings, as both U.S. equity futures and oil prices remained under water. The pairing slipped to session lows under 0.9860 after the better Ivey PMI outcome, though dealers continued to note bids into 0.9850, which limited downside to 0.9854 in late morning trade. Even as equities slipped further in afternoon trade, USD-CAD remained heavy, idling between 0.9855 and 0.9865 into the close.