JPY weakness and EUR strength dominated in Asia, which saw a break out of the recent trading range. In Europe, manufacturing PMI data is in focus ahead of U.S. NFP and ISM manufacturing. In Asia, China PMI was positive, with the HSBC flash reading at two-year highs. The official reading dipped, but it was still in expansionary territory and the new orders index advanced, which will keep alive optimism over the global growth outlook. The ECB are also due to release the details of the next LTRO repayments, but it may not have the same impact on the EUR ahead of NFP. The market is already long and ambition to add to aggressive positions is likely to be restrained to degree. AUD continues to struggle overnight either side of 1.0400 after a strong EUR-AUD bid, but domestic data included a slowdown in PPI and another poor PMI reading.

[EUR, USD]
EUR-USD did most of the work on the topside once Tokyo opened. Appetite to get long of EUR was broad based, but it was EUR-JPY's sharp rally out of 124.00, which provided liquidity for EUR-USD's move from 1.3570 over 1.3630. More heavy EUR-AUD demand went through and it cleared 1.3100, which reinforced the uptrend as long term macro funds cut long standing short positions. Today's ECB LTRO repayment announcement is due again, but it may not have the same impact as last Friday. The market is already long of EUR and ahead of U.S. NFP appetite to add aggressively to positions could be restrained.

[USD, JPY]
JPY fell sharply after Thursday's big expiries between 90.00 and 91.50 provided the potential for extended losses. USD-JPY was on the rise from early trade, with offshore and domestic funds lifting the pair from the 91.50 region and it extended through 91.80. One large local name lifted the pair from 91.90 and extinguished 92.00 barriers to force highs over 92.25. EUR-JPY was on the front foot from the open after it closed above 124.00 on Thursday and made steady progress until 125.00 gave way, which fueled a surge up to 125.70. Risk traders that have enjoyed the benefits of yen-funded carry will look for more extended yen weakness. As a reminder, Japanese officials have said USD-JPY at 95.00 or 100.00 is no problem.

[GBP, USD]
Cable has benefited from the extended EUR-USD rally, as well as talk that over the next fews days there may be sizeable demand to buy Cable related to a large dividend payment. Sterling kept its bid tone throughout the day on Thursday and peaked near 1.5875. In Asia, it traded between 1.5850 and 1.5875 and edged up to 1.5880 by early Europe. However, due to the U.K. outlook we still see macro funds more likely to sell sterling into strength than position for any significant upside. Most bank research notes have forecast much weaker levels this year and Cable may struggle to sustain moves into 1.6200 or above in the medium to long term.

[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 rallied back over 1.2400 in Asia. The interest helped USD-CHF turn away from key support at 0.9075-80. 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. It is a 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 1.2370 to 1.2340 and offers are noted in larger size from the 1.2400-20.

[USD, CAD]
USD-CAD consolidated Thursday's losses under 1.0000 overnight. After reaching 0.9958 lows it backed up between 0.9970 and 0.9980, where it remained over the course of the Asian session and in early Europe. Dealers again noted decent bidding interest return into the lows from shorter term accounts, and reported another band of corporate buying from 0.9950. 1.0000-10 is likely to be a near-term resistance zone now as range players look to keep the pair offered.