European market participants awaited today's policy decisions from the BoE and ECB. Ahead of then movement was dominated by early sovereign demand for EUR and GBP on dips, while fund names bought the CHF and sold JPY. GBP shorts were squeezed after incoming BoE Governor Carney addressed the Treasury Select Committee. He said the BoE must exit unconventional policy, which triggered a scramble for GBP, but overall his remarks were balanced and took into account the uncertain economic backdrop. As well as the central bank policy outcomes there is U.S. jobless claims, Q4 productivity and consumer credit due, along with Canada building permits.

[EUR, USD]
EUR-USD was lifted by a Middle Eastern name from 1.3525-30, which fueled follow through interest from European speculative names. The pair moved over 1.3570 and also got added momentum from EUR-JPY's rally from 126.40 to 127.30 as yen came under pressure from the European open. EUR-USD offers are tipped into 1.3600, where fund names appeared on Wednesday, while EUR-JPY is in territory, where both exporters and option names have been selling in the last session or two. The EUR is more broadly balanced than it was at the start of the week as eurozone politics offset the recent improvement eurozone outlook. Comments from ECB's Draghi will determine where it goes from here. Draghi may be tempted to weight his positive remarks from last month given the rise rates and the EUR rally.

[USD, JPY]
JPY was weighed by a U.S. account in USD-JPY, which was the catalyst for a move from 93.50 to 93.80 and gave EUR-JPY added traction over 127.00. USD-JPY and EUR-JPY experienced a short period of consolidation since yesterday's Asian trend highs as profit taking set in. However, given the lack of pullback over the last few weeks fund names and specs have aggressively reentered the market for fear of missing out on further yen weakness. Overnight, Japanese policy makers defended Japan's policy stance, claiming it was aimed at tackling deflation and was not an attempt to competitively devalue the currency. The frequency of these kind of remarks may pick up as we enter next week, where the G20 are due to meet in Moscow. Sources have said that Japan will not be named as a currency manipulator, but currencies are expected to feature on the agenda.

[GBP, USD]
GBP shorts were squeezed after Carney told the Treasury Select Committee that the BoE must exit unconventional policy and improve monetary/macroprudential coordination. Carney said that the BoE must enhance forecasting and when policy exit comes it must inspire confidence. Cable initially jumped from 1.5675 to 1.5710 and saw another squeeze up through 1.5740 and 1.5750, which fueled a stop hunt towards the 1.5770 area. However, gains were unsustained after an Asian central bank that likes to job the range sold around the highs and it headed back to option strike territory just in front of 1.5700. Carney's remarks on exiting policy were eye catching, but also misleading when taking in account his other remarks on the current economic uncertainty and potential risks ahead.

[USD, CHF]
EUR-CHF bumped against support into 1.2300 and below in Asia, but has struggled to sustain an early move higher. It received a fillip from early Swiss buyers up to 1.2330-35 as a big jump in Swiss consumer confidence was a positive for risk appetite in the region. However, the EUR-CHF upside was hampered by USD-CHF heaviness. It was weighed by early fund selling after it was unable to sustain a move on 0.9150 yesterday and pulled back to 0.9065 today. However, the downside should be supported by long term outstanding barriers from 0.9000, which encouraged buyers from 0.9050 to 0.9020 in recent sessions.

[USD, CAD]
USD-CAD headed lower after it was unable to clear offers into 1.0000 on Wednesday. A move higher in European stocks fueled an easier tone and it triggered stops under 0.9940 late on in the European morning. However, once these were filled buyers were evident in front of 0.9930 and it headed back over 0.9945 ahead of the North American open. The failure to clear 1.0000 yesterday and subsequent downturn should leave bias on the downside, but overall USD-CAD is still broadly rangebound.