The USD firmed moderately as stock markets corrected from recent gains while GBP dove following sub-expectations U.K. production data. EUR-USD ebb back to levels around 1.3000. Cable fell back under 1.4900 and made a fresh major-trend low of 1.4829 following the weak data, and sterling also made a nadir against the euro. USD-JPY logged a fresh three-and-a-half year peak to 96.71 before U-turning quite sharply back below 95.00. Aside from the U.K. data, there were few strong leads during either the European morning or Asia sessions. Spain's bill auction today was successful. The Chinese stock market remained a notable underperformer, still reeling from the disappointing batch of China data that had come in over the weekend (which included the cocktail of softer production figures but perkier inflation).

[EUR, USD]
EUR-USD ebbed to a low of 1.2992 after closing yesterday in New York at 1.3043 bid. The 1.3000 level is reported to be a big option strike level with expiries seen there today and through the rest of the week, which in quiet trade could exert some gravitation pull on trade. Support and bids are reported into 1.2980, and at 124.50-60 in EUR-JPY. Stronger EUR-USD technical support is marked by last Friday's 1.2955 low, resistance at 1.3045-50.

[USD, JPY]
USD-JPY made its fourth consecutive higher high today, reaching a new major-trend peak of 96.71 before retreating under 96.00. Exporter selling was noted, while stops were triggered through 96.00. Mixed Japanese data had little impact. Japanese markets have already gone a long way in factoring in prospects of committed deflation-busting policies, which partly explains the rebound in the JPY today as weaker speculative positions were squared out. Nominee BoJ governor Kuroda said this week that the central bank will consider buying derivatives if he's confirmed as governor and also showing that it will be ready a quick expansion in monetary stimulus. This should help maintain relative yield spreads in favour of the bearish yen trend. Japan data today included the tertiary index (service sector), which dove 1.1% m/m in January after the 1.1% rise in December, while the Q1 MoF Business Outlook survey improved to 1.0 after -5.5 in Q4, and the CGPI price gauge contracted 0.1% y/y.

[GBP, USD]
Cable fell back under 1.4900 and made a fresh major-trend low of 1.4829 following the production data, and sterling also made a trend fresh nadir against the euro. Resistance can be expected at 1.4900-10 and trendline resistance comes in at 1.4920, which would market a good near-term risk level. EUR-GBP logged a fresh high to 0.8776, though headlines from broader euro selling left 0.8800 unchallenged. Initial EUR-GBP trend support comes in at 0.8715. U.K. January industrial output was -1.2% m/m versus the median for +0.2% m/m, leaving the y/y figure at -2.9% y/y after -2.1% in December. The monthly drop was the sharpest fall since last June. The picture the data paints was made worse by the fact that the ONS stated that snowy weather conditions that were seen toward the end of January had little impact.

[USD, CHF]
USD-CHF has consolidated while EUR-CHF has edged out a five-day low of 1.2317, with the Swiss currency finding support amid the corrective tone in stock markets. USD-CHF has settled lower after making a six-month peak on Friday in the wake of the U.S.jobs data. Trendline support comes in at 0.9445 and the 200-day moving average at 0.9433. EUR-CHF technical support and bidding interest is expected into 1.2305-15, while selling interest is seen into 1.2350-55. The CHF had been an underperforming lately, driven by rising risk appetite in global financial markets, which the currency correlates inversely to. Last week CPI data, at -0.3% y/y, assured that the SNB will persist with its easy monetary policy and 1.2000 currency limit peg, which we expect to be affirmed at this week's policy meeting.

[USD, CAD]
USD-CAD peaked over 1.0290 into the North American open, though headed steadily albeit modestly lower through the session. The pairing based near 1.0255 in light trade, largely as risk appetite had a positive tilt to it. With no data on either side of the border, focus remained on risk levels. Equities and oil prices were up moderately, keeping downward pressure on USD-CAD.