The European morning was fairly quiet as market participants struggled for leads after yesterday's holidays in the U.S. and Canada. JPY was influenced by conflicting remarks from Japan PM Abe and Finance Minister Aso, which suggests that any talk of bond buying may be premature and fueled a USD-JPY move from 94.00 in Asia and towards 93.35 in Europe. EUR got a lift from German ZEW, but intra-day accounts used the uptick to sell into, which has been the case for several sessions. Cable steadied around 1.5500 today versus Monday's trend lows on talk of GBP repatriation by big insurers.

[EUR, USD]
EUR-USD maintained tight ranges for the second consecutive session. Early sell-interest met good standing bids into 1.3330, which encouraged a small move higher. Dip buyers gained encouragement after a better than expected German ZEW outcome, but the topside held as good offers from 1.3380 capped ahead of buy stops through 1.3400. Flows have been disappointing so far. A Middle Eastern account had some EUR-JPY to sell early on, which influenced the early move lower, but model funds have largely absorbed all of these flows. A light U.S. calendar today could see more rangebound action until Wednesday. In Europe, there is inflation data to digest, which may be a bigger market mover now after Draghi's comments on price stability and EUR appreciation. In the U.S., the FOMC minutes are due. Option strikes include outstanding 1.3350 and 1.3400 maturities.

[USD, JPY]
JPY demand steepened in early Europe after EUR-JPY selling pressure went through via a Middle Eastern account. The pick up JPY came on the back of comments from Japan Finance Minister Aso, who ruled out bond buying and a change in BoJ, which was in direct opposition to comments from PM Abe on Monday. However, Abe has reiterated today that he would like to keep it as an option, which cites the division between the two politicians. The local press has intimated that they disagree on the most suitable candidate for BoJ Governor and the decision will now be delayed until after Abe's visit to the U.S. on Feb 21-24. Intra-day accounts note support at 93.20-30, but several market participants are focused on the 93.00 region, where big stops feature. Offers are now likely from 93.70, according to our market sources.

[GBP, USD]
Cable headed back over 1.5500 after Middle Eastern demand went through from 1.5470. A U.K. clearer has also been active and came in conjuction with reports that U.K. insurers may repatriate GBP in order to take advantage of recent weakness. We have also heard reports that demand from oil companies increased and option related activity has picked up since Cable broke 1.5500 last week. During Monday's session it reached trend lows just under 1.5440 on more macro fund selling, though good bids from 1.5430 to 1.5400 barriers put a floor in place. The upside should meet good supply from 1.5530 to 1.5550, which are protecting trailing stops.

[USD, CHF]
EUR-CHF firmed up a touch from 1.2320 back over 1.2330. The swissy experienced light selling amid speculation that the SNB could make an announcement, with SNB Jordan due to speak at 17.15GMT. The talk is unsubstantiated though and Jordan was always due to speak on the higher franc and the current account. EUR-CHF should meet sellers into 1.2350 from range players ahead of larger offers from 1.2370. Buyers kept the downside underpinned ahead of 1.2300 and below for several sessions. Meanwhile, USD-CHF is fairly static around 0.9230, but may have scope for higher levels after 0.9200 held for the last several sessions. Again, the outlook for the CHF will be wholey dependent on EUR movement, with SNB policy risk quite low currently after recent SNB rhetoric suggested policy status quo for the foreseeable future.

[USD, CAD]
USD-CAD broke the top of the recent range after yesterday's London close. CAD$ traded at its weakest levels since late July 2012 after stops gave way through 1.0100. CAD$ has been under pressure since last Friday's weak manufacturing data, but thin trading conditions exacerbated price action on Monday. Bids are likely now from 1.0070-80 and close to yesterday's base from 1.0060. Offers are tipped from 1.0130 and there are outstanding option barriers at 1.0150.