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. In Europe, Cable was stable throughout close to 1.5150 after it closed the gap between N.Y. closing levels of 1.5160 and 1.5075 trend lows. USD-JPY pulled back to 93.65 on a plethora of factors, which included large 95.00 barriers, yen demand related to Japan Tobacco's stock sale and exporter hedging.

[EUR, USD]
EUR-USD was boosted to the 1.3250 area by Swiss names after it found support from 1.3200 at the European open. Market sources claim that outstanding 1.3200 expiries may be influencing again, while there are more outstanding options at 1.3250 that are also rolling off, which could potentiallly provide a modicum of support as traders await the Italian election outcome. EUR-GBP is a supportive lead, with the cross moving up to 0.8750 as sterling selling picks up after it corrected the gap lower at the Asia Pacific open after the Moody's downgrade. Cable retraced the open drop to 1.5075 to trade back to 1.5163 European highs, but has ebbed to 1.5130 on macro sales.

[USD, JPY]
USD-JPY's upside is limited since it registered new trend highs just over 94.75 in early Asia Pacific trade. Factors that are encouraging yen demand include exporter hedging, Japan Tobacco's stock offer and option expiries. The Japanese government are selling a third of its stake in Japan Tobacco, which is expected to raise around $10 bln towards earthquake reconstruction efforts. Market sources claim more than 40% will go to foreign entities. In the options space, over a yard of expiries are noted at 94.00, along with large amounts at 93.50 and 93.00. Position traders are still looking for levels to buy USD-JPY on dips after news that ADB chief Kuroda is likely to get the BoJ Governor role, but upward momentum may be limited intra-day. Over 94.50 supply related to long gamma positions generated by 95.00 barriers should also influence.

[GBP, USD]
Cable corrected the overnight sell off to trade just over 1.5160 from new trend lows around 1.5075. All of the big action came in thin trade at the Asia Pacific open, but since then Cable has spent time closing the gap from N.Y. closing levels of 1.5160, which is a usual phenomenon after such a steep move. Cable should see more persistent selling on upticks. However, working against the trade is increased speculative short positioning, oversold technical studies on the daily chart and increased appetite to hedge at current levels from U.K. corporates overseas. On the macro front, although the U.K. picture is hardly rosey, there are signs that things may be stabilizing. This may be backed up by this week's U.K. data releases.

[USD, CHF]
EUR-CHF is stable after after good bids at 1.2270 put a floor in place. The cross is being influenced by USD and CHF fluctuations. A USD-CHF move from 0.9315 down to 0.9265 added some pressure on the cross, though it is at levels, where good support has been building for several sessions and is close to the bottom end of the recent range. EUR-CHF is likely to see more limited upside bias in the very near term, 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, CAD]
USD-CAD is supportive around 1.0230 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.