JPY and GBP were the big movers, but most of the action was concentrated over the Asia Pacific open and followed by corrective action. Cable gapped from 1.5160 to 1.5075 at the open after Moody's downgraded the U.K. sovereign rating to AA1 from AAA with a stable outlook. USD-JPY jumped from 93.40 to just over 94.75 after the Japanese press said that ADB Governor Kuroda is likely to be the next BoJ Governor, while Iwata and Nakaso are tipped as deputy governors. EUR-USD benefited from EUR-JPY and EUR-GBP strength in early trade, which lifted it over 1.3200, though movement was still fairly limited as the weekend Italian was reportedly too close to call, according to wire reports. Economic data included China February HSBC flash manufacturing PMI, which hit four month lows of 50.4 from 52.3 in January, but the market reaction was muted.

[EUR, USD]
EUR-USD is trading a tight range close to 1.3200 after it was unable to sustain an early move on 1.3240. The Italian election outcome led to the more defensive tone and the move higher was used as a selling opportunity. A more favourable Italian election outcome may see a push back towards good offers at 1.3250, though the technical backdrop is still skewed to an eventual test on the 100-dma at 1.3120.

[USD, JPY]
USD-JPY pulled back from early trend highs over 94.75 on good option related selling, as well as exporter hedging activity. Profit taking was prevalent ahead of 95.00, where large option barriers are widely noted and it moved back into 94.00 and below, where a congestion of buyers were noted, leaving it around 94.20 at the Asian close. Short term accounts are expected to buy dips, with 95.00 now a near-term target.

[GBP, USD]
Cable is likely to meet selling pressure on upticks in early Europe after Moody's downgraded the U.K. rating. Cable corrected early weakness and traded back over 1.5130. Further topside movement was a struggle due to the underlying trend and very weak U.K. sentiment. However, market positioning is short GBP and this could potentially limit how far Cable can extend on the downside. A pick up in corporate hedging is also likely with the 1.50 handle popular for long-term hedging.

[USD, CHF]
EUR-CHF is stable after after good bids at 1.2270 put a floor in place on Friday. However, the cross has been sensitive to EUR price action and this is likely to determine action ahead, with focus on the Italian election outcome. Movement over 1.2300 should meet tentative selling from 1.2310, while orders increase in size from the 1.2330 and 1.2350 region. USD-CHF continued to hug the 0.9300 area after it took last week on risk aversion and the FOMC minutes, but it is also in territory where natural supply is now beginning to work against the topside from the 0.9330 and above.

[USD, CAD]
USD-CAD is supportive around 1.0225 after it popped to trend highs over 1.0250 on Friday after the soft Canadian CPI and retail sales outcomes. The cool CPI backdrop will take any pressure off the BoC, and as a result, the loonie could be in for a weak patch going forward. Buyers are widely tipped now from 1.0200-10. Offers are congested from 1.0280 up to 1.0300, which are a series of tops from late June.