The dollar and yen were weighed by positive risk appetite, leaving EUR close to 1.3500 barriers and USD-JPY traded in close proximity to the 91.00 level. Japan's Aso and Abe both reiterated the desire to beat deflation and boost growth, but the comments only had a minor influence on yen moves, which were driven by corporate flow and options activity. AUD was supported on dips into 1.0450 after Tuesday's recovery and held up despite the surprise Federal election call by Australia PM Gillard for September 14, 2013. Regional data releases included a slight pick up in Japan retail sales and a healthy rise in South Korea industrial production, though the current account corrected from November's record surplus of $6.9 bln.

[EUR, USD]
EUR-USD traded another very tight range in close proximity to large outstanding barriers from 1.3500. EUR-JPY firmness provided a modicum of support, but it still could not overcome very large offers from 1.3495. There are also reports of more outstanding barriers over 1.3500, which has fueled large Asian account offers in the last 24 hours, as well as proprietary account interest. However, any corrective action has been extremely shallow and both improving fundamentals and the technical backdrop point to higher levels.

[USD, JPY]
USD-JPY was supported into 90.65-70 by Japanese importer demand and speculative activity via the JPY crosses. The dollar pairing traded into 91.00, but struggled to move through exporter offers and option related activity due to heavy expiry interest for this Thursday, along with outstanding option barriers higher up. EUR-JPY briefly moved over 122.80, but also ran into option type names ahead of 123.00-00, where both barriers and large long-term resistance is noted. AUD-JPY had a good session after Japanese names boosted it through 95.00-10 resistance to multi-year highs just over 95.30. Yen is likely to maintain softer levels, but of note the impact from Japanese policy rhetoric was less pronounced.

[GBP, USD]
Cable has posted a small relief rally in the last 24 hours on the coattails of EUR-USD strength, which carried it up from the 1.5700 region back to the 1.5770 area. However, sterling gains may not be sustained given the underlying weakness, which is exacerbated by U.K. economic fundamentals. Cable should meet sellers into 1.5780 and 1.5800. EUR-GBP is supported on dips as longs target a test on 0.8600 barriers, although there is a pick up in downside hedging due to the risk of potential setbacks and 0.8500 strikes have been popular in the short end (one week or below).

[USD, CHF]
Hedge fund buying supported EUR-CHF into 1.2400 on Tuesday, but it has struggled to sustain altitude since it pulled back from over 1.2500 recently. USD-CHF is meeting another round of corporate selling back across 0.9220 after European names forced the dollar pairing to 0.9194 lows on Tuesday and it threatens to overwhelm the cross. EUR-CHF will take it guidance no doubt from developments in the eurozone and EUR-USD performance. However, support at 1.2370 could be tested based on weakening daily indicators.

[USD, CAD]
USD-CAD edged back towards 1.0000 after it was unable to sustain recent gains. The more dovish BoC policy stance last week is now fully discounted and CAD$ is trading off strength in oil and equities. The positive risk appetite combined with weakening USD-CAD technical indicators fueled sell-interest from 1.0030 at the Asian open and it threatens to force through stops under 1.0000. There are bids that lie ahead, but another positive session for risk could change the near-term picture. Under 1.0000, previous resistance at 0.9980 should encourage buyers.