European markets consolidated after heavy activity in the last 24 hours. EUR-USD added to post-ECB gains to reach 1.3282 highs and then turned sideways just ahead of 1.3250. Cable backed away from 1.6180 in Asia and extended below 1.6110 after poor U.K. production numbers. EUR-CHF posted four-month highs at 1.2179 after below expectations Swiss CPI reignited SNB policy speculation following ZKB's warning on Thursday that it could charge small savers for deposits. USD-JPY traded a tight range close to 89.00 after it rallied sharply in Asia following a much larger than expected Japan current account deficit, more aggressive policy rhetoric from Abe and the government approval of the Y10.3 tln stimulus plan.

[EUR, USD]
EUR-USD held steady after surging to the 1.3280 region by early Asia following yesterday's ECB press conference and more dovish policy rhetoric from Japan. Yesterday's unanimous ECB rate decision saw heavy EUR demand right across the board. EUR-USD traded between 1.3250 and 1.3280 since the European open, with short term buyers underpinning, but a thick wall of offers cap from 1.3280 to 1.3310. Barriers are confirmed in smaller size at 1.3300 ahead of large 1.3310 interest, which are also December highs. The downturn in equity markets has sapped some momentum. Investors are more cautious after the German finance ministry said the economy may have shrunk in Q4, while deputy chairman of China's NDRC said 2013 GDP may come in at 7.5%, which is well below IMF's 8.2% forecast.

[USD, JPY]
USD-JPY consolidated the overnight rally, leaving it close to 89.00. After the heavy overnight session European trade settled to a narrow band. It started the European session around 88.90 and moved up to 89.10, but has traded either side of 89.00. USD-JPY is now in territory that makes 90.00 a viable target after Abe indicated that a change in BoJ law was still on the table and also suggested a BoJ employment target. However, there is no appetite to aggressively chase the market at current levels. Buyers are noted into 88.70 and 88.50, while light exporter offers lie at 89.30-40 ahead of another round of option barriers at 89.50. Larger resistance is noted from 89.70 to long-term barriers at 90.00, while more large offers come in at 90.20 ahead of a large upstrike at 90.75 fron a long-term range binary position

[GBP, USD]
GBP hit session lows after poor U.K. production data. Manufacturing contracted in November and industrial production only posted a modest rebound in November. Cable moved into 1.6120 from 1.6150, which compared with early Asia highs of 1.6180, while EUR-GBP rallied out of 0.8220 to 0.8235. The short term picture for Cable shifted to the topside after strong sovereign demand went through yesterday, along dollar weakness following ECB-inspired moves. However, U.K. fundamentals remain weak and funds are expected to sell into strength still. Long term players have left offers from 1.6200, which are behind short term interest from 1.6165 to 1.6180. Cable bulls will try to maintain upside bias with bids at 1.6100 and 1.6080.

[USD, CHF]
EUR-CHF tripped stops between 1.2150 and 1.2170 to reach four-month highs after Swiss December CPI came in at -0.4% y/y, which reinforced speculation over negative deposit rates. During Thursday's session the CHF weakened after ZKB said it reserves the right to charge on deposits of small savers. Late last year both UBS and CS decided to charge on CHF deposits placed by financial institutions, but the ZKB warning to small savers has reignited SNB policy speculation. However, a continued improvement in the eurozone could reduce capital inflows and also take presure off EUR-CHF. Higher up there are long standing 1.2200 barriers that have been in place since early January 2012.

[USD, CAD]
USD-CAD finally cleared away support around the 0.9850 mark and headed to 0.9827 lows by early Asia. Progress around this levels was just as slow though due to a build up of corporate buy order and long term technical levels. It backed up to 0.9845 by early Europe as stock markets corrected in Asia, while there was also interest from short term accounts playing the range. The upside should also remain a tough nut to crack. Option and fund offers are also seen from 0.9880 to 0.9900. Flows have been lacking this week, and until we see volumes come back, range trade looks like the way to go.