GBP saw most of the European morning flows on month end activity. Early corporate related demand fueled a Cable move over 1.5840, but it gapped under 1.5800 late on in the morning on fix related selling. EUR-USD was fairly static close to 1.3550 as option strikes influenced after failure to clear 1.3600 barriers. JPY was a bit easier amid demand for EUR-JPY and AUD-JPY on dips, while large option strikes kept USD-JPY tied to 91.00. AUD-USD traded over 1.0425 after strong corporate bids put a floor in place overnight and option strikes at 1.0410 fueled gamma demand from the European open. In Asia, a S&P report circulated that said China was at risk of an investment-led collapse, which could impact economies that rely on its demand for resources. A fall in German retail sales was offset by an unexpected fall in German jobless. Elsewhere, a pick up in U.K. Nationwide house price data could point to more FLS success, while an unexpected improvement in U.K. consumer confidence was noted overnight.

[EUR, USD]
EUR-USD experienced early profit taking amid strong option related offers from 1.3580. The EUR crosses also experienced light selling pressure, with EUR-CHF, EUR-GBP and EUR-JPY weighed by short term fund position reduction. EUR-USD briefly moved under 1.3550, but good standing bids are noted into 1.3525-30 and into the 1.3500 area as model funds and momentum accounts keep the bias skewed to higher levels. There are a heavy congestion of buy stops from 1.3610 to 1.3640, which could see an aggressive bid if broken. Longs are targeting an eventual push on 1.3700 and above, but some bank research notes think an extended run on 1.4000 could be a push too far and also levels that could concern European policy makers.

[USD, JPY]
JPY was supportive on profit taking activity, but overall it only remained a short distance from yesterday's trend lows. USD-JPY is still being influenced by massive option expiries that are rolling off today and include some 91.50 barriers, which could pave the way for further upside in the sessions ahead. Buyers on the way down include offshore names towards 90.70-80, while Japanese importers have placed bids into 90.50. The JPY crosses met spec names on setbacks, leaving prices skewed to the topside. EUR-JPY is trading comfortably ahead of 123.00 versus recent highs around 123.80 and AUD-JPY is relatively stable around 94.50 after it corrected from 95.40 on Wednesday. There was more policy rhetoric from BoJ deputy governor Yamuchi on the possibility of further easing and BoJ candidate Iwata also backed up the prospect. Overall, nothing significant to add to yen selling pressure and markets were less reactive to the remarks.

[GBP, USD]
GBP was firmer compared to recent sessions, but could not sustain all of its early gains as month end saw choppy action. Cable firmed up from 1.5800 after the European open and tripped light stops through 1.5830 to trade just over 1.5840, which forced EUR-GBP to 0.8560. Cable turned quickly lower after macro offers capped into 1.5850, along with fix related selling by a clearer, which tripped stops under 1.5800 to force 1.5787 lows and helped EUR-GBP back over 0.8580. Over the longer term macro accounts are still expected to sell sterling on strength amid growing expectations that when Carney takes over the BoE on July 1st that more policy stimulus could be on the way. Carney will address the Treasury Select Committee next week when the BoE meets.

[USD, CHF]
EUR-CHF benefited from bargain hunting after the correction seen since the start of the week. After big swissy inflows went through EUR-CHF bottomed out just under 1.2340 and is attempting to rally after it moved back over 1.2350. The interest has helped USD-CHF turn away from key support at 0.9080 and it has traded as far as 0.9120 on light repositioning. However, the breakdown from over 0.9250 this week is a bearish lead and if risk appetite can improve into the weekend then further losses are likely. Friday is big day on the data front, with global manufacturing PMI data due, along with the U.S. NFP release. Intra-day accounts that are trading off order flow cite EUR-CHF bids at 1.2320 to 1.2300 and offers are noted in larger size from the 1.2380 region.

[USD, CAD]
USD-CAD traded at familiar levels in Asia after it was unable to sustain Wednesday's rally over 1.0050. It pulled back towards the 1.0020 region, where buyers were noted. There is support tipped into the 1.0000 region, which is protecting sell stops lower down, while offers are expected to keep the topside in check from 1.0060.