AUD posted the biggest footprint in Asia after China recorded a large trade , which took its December surplus to $31.6 bln from $19.6 bln in November. Exports were up 14.1% y/y, which was compared with 2.9% y/y in November and offered further evidence that the economy has turned a corner after the soft patch earlier on in 2012. EUR maintained narrow ranges ahead of the ECB policy meeting, where comments from Draghi will be carefully scrutinised after the rate cut discussions in December. JPY experienced renewed weakness on Wednesday, which continued into today's Tokyo fix and lifted USD-JPY through 88.20. The focus in Europe today will be on the ECB meeting, while the BoE is also expected to leave policy unchanged.

[EUR, USD]
EUR-USD continued to tread a narrow range as the larger accounts were sidelined ahead of today's ECB policy meeting. It pulled back from the 1.3070 area at the Asia-Pacific open and traded into 1.3040 amid good EUR-AUD selling and position squaring. Support is noted between 1.3030 and 1.3000, which is protecting a round of stops below, but the bigger pivot point remains the 1.2980 level, which has held during the recent year-end holiday period. Sellers are lined up from 1.3090 to 1.3110 ahead of a larger round of offers into the 1.3040-50 area. .

[USD, JPY]
USD-JPY met good dip buyers after it moved just above 88.00 during Wednesday's N.Y. session on renewed yen short positioning by offshore funds via USD-JPY and heavy retail interest via the JPY crosses. USD-JPY headed up from 87.90 in early Asia and moved through 88.20 by the Tokyo fix. Further gains were stymied by light exporter offers and profit take orders that are layered towards the recent top at 88.40, where option protection is noted ahead of 88.50 barriers. AUD-JPY posted marked gains after the jump in China trade, which saw it rally from 92.30 to the 93.10 area. Japanese retail names were notably aggressive via the commodity bloc currencies on Wednesday.

[GBP, USD]
Cable is stable just ahead of 1.6000 after it was unable to sustain levels under 1.6000 on Wednesday. It triggered stops through 1.6000, but ran into natural buyers ahead of support between 1.5990 and 1.5965. Cable is now in territory where hedging activity could start to pick up. For example, an Asian reserve manager has reportedly been buying Cable on dips for the last two to three sessions. However, it should not detract from the underlying trend, which is skewed to the downside amid a poor U.K. outlook. Short term sellers are noted from 1.6040-50 and more offers are noted at 1.6070 and into 1.6100.

[USD, CHF]
USD-CHF steadied after it held on to the 0.9200 level following a brief period of dollar weakness during Tuesday's Asian session. USD-CHF's move lower came in lockstep on the EUR-USD squeeze up through 1.3100 and extended run on 1.3140. However, broader market sentiment weakened and the dollar firmed up, which lifted USD-CHF back to the 0.9250, where it has been since Wednesday's open. We expect short term accounts to play the range. However, a break below recent lows at 0.9185 would reinforce dollar bears. EUR-CHF is still trading within a wafer thin range just under 1.2100.

[USD, CAD]
USD-CAD is range bound. It tested the bottom of its range during Wednesday, but continued to find buyers on either side of 0.9850, while selling continued into the 0.9880 mark. Sell stops were touted at 0.9840, and a break there will likely see the December low of 0.9825 targeted. The stops were safe however, as aggressive USD-CAD buying was reported into the 0.9855 level, with corporate bids still lined up at 0.9850, according to traders. The pairing moved back over 0.9875, though momentum was stopped by reports of offers from 0.9880. It appears USD-CAD is fairly well hemmed in for now.