JPY fell to new trend lows in Asia after soft CPI data added support for Japan's current policy path and Japanese policy makers continued to deny that the recent BoJ easing was aimed at weakened the yen. USD-JPY rallied from the 90.00 area at the Asia Pacific open and extended through 90.50 option barriers. AUD-USD extended Thursday's losses after a bearish technical signal and increased expectations of a RBA rate cut forced a move to 1.0440. EUR-USD is well supported into today's ECB LTRO repayment announcement, which could back recent signs that the eurozone is now in better shape. The German Ifo is also due, along with U.K. Q4 GDP.

[EUR, USD]
EUR-USD has been well supported on dips for several sessions, though within the broad 1.3250-1.3400 trading range. It moved towards the top of the range on Thursday and is currently underpinned in front of 1.3350 into today's ECB LTRO repayment announcement. There are expectations that banks will repay a large majority of the loans due to improved conditions in the eurozone, which is a short term positive. Meanwhile, eurozone data has been mixed, but Germany shows signs of recovery and reinforces ECB expectations for a broader recovery in the region in H2.

[USD, JPY]
Flows via USD-JPY and the JPY crosses were heavy after Thursday's weak Japan trade data and ongoing policy rhetoric added backing to Japan's more activist policy stance. USD-JPY started the session close to 90.00 after rallying from 88.40 yesterday and got further support after a weak CPI reading. USD-JPY broke 90.50 options barriers to reach the 90.70 area on heavy importer demand and option related flows. Exporters were noted on the way up, but could not stop the move higher. EUR-JPY saw very heavy demand from U.S. hedge funds after a strong bid from Asian sovereigns yesterday to traded over 121.00. GBP-JPY breached 143.00, while AUD-JPY moved up to 94.70, but was held back a bit by heaviness in AUD-USD.

[GBP, USD]
GBP is heavy after it was hurt by a speculative drive for barriers on Thursday, which tripped Cable stops through 1.5800 and EUR-GBP was ramped over 0.8450 and then 0.8475 during today's Asian session. There were expectations that heavy EUR-GBP could go through related to demand from U.K. banks that are repaying loans back to the ECB, along with talk that today's U.K. Q4 GDP could be weaker than expected.

[USD, CHF]
EUR-CHF extended gains to trade into the 1.2470-80 area on broad EUR strength. Long position building has been noted over the last two sessions from large Swiss and |German accounts since it corrected the move from 1.2570 to under 1.2350. In the long term there are expectations that EUR-CHF will trade into 1.2600 and above. However, the success of this trade will largely depend on whether the eurozone can sustain the improved conditions seen since the start of the year. Intra-day accounts have placed offers into 1.2500 ahead of good size buy stops.

[USD, CAD]
USD-CAD has steepend its bid to trade into the 1.0035-40 area. Bids were seen at 1.0000-0.9990, which provided support on Thursday, but further gains may be slow due to option barriers at 1.0050, which will reportedly be defended until the Friday N.Y. options expiry. As a result, 1.0000-50 may define trade into the North American morning session.