JPY was the major mover in Europe. Profit taking by JPY shorts and comments from Finance Minister Aso triggered very choppy action. Aso said the yen had weakened more than intended in the move from Y78 to Y90, which triggered a significant USD-JPY drop from 93.00 to 92.20, but MoF officials moved quickly to quash the report and said Aso remarks were misinterpreted. Next Monday's holiday in Japan and a series of holidays across Asia for the Chinese New Year undoubtedly exacerbated position reduction ahead of the G20 meeting, where currencies will feature on the agenda. Elsewhere, Cable benefited from a correction of oversold levels and EUR-GBP weakness. AUD extended its rebound out of 1.0250 to the 1.0350 region as good China trade data and option strikes supported. Other releases overnight included a record trade deficit for Japan.

[EUR, USD]
EUR-USD regained its poise after bids at 1.3370-80 held in early trade. EUR-JPY's recovery from 123.50 back firmly over 124.00 enabled it to trade higher, along with firmer stock markets, which benefited from overnight strength in China trade data. EUR-USD made it back to 1.3425, but after the fallout from Draghi on Thursday intra-day accounts prefer to sell ahead of offers at 1.3440-50, while more are tipped from 1.3470 in large size. The lack of upside could leave EUR vulnerable to a stop hunt through 1.3370 and key support at 1.3350.

[USD, JPY]
USD-JPY was weighed on by profit taking ahead of a long weeked in Japan. Selling pressure was noted from fund names and short term accounts from 93.75 in Asia early on and it headed to the 93.20 ahead of the Asian close. In Europe, JPY surged on as leverage funds cut back on USD-JPY longs, while a prominent Asian fund sold both the dollar pairing and EUR-JPY. Aso said the yen had weakened more than intended in the move from Y78 to Y90, which exacerbated the USD-JPY drop from 93.00 to 92.20, but MoF officials moved quickly to quash the report and said Aso remarks were misinterpreted. USD-JPY's downside has been well supported from 92.20-30 from Tokyo backed bids and some funds may see the pullback as a buying opportunity.

[GBP, USD]
Cable capitalised on EUR-GBP heaviness and charts, which helped it over 1.5750. EUR-GBP is struggling to post any sort of recovery after the fallout from 0.8600 yesterday, which extended to the 0.8510 area today. Cable steadied just under 1.5700 on Thursday as Carney's maiden testimony to the Treasury Select Committee was deemed to be less dovish than the market had hoped for. Looking at the daily chart, Cable's inability to break key trendline support at 1.5630 on Tuesday and Wednesday also indicated a near-term base and it is now correcting oversold levels, suggesting scope for more upside if risk appetite can hold up into the weekend.

[USD, CHF]
EUR-CHF traded close to 1.2300 after it edged higher on light EUR supportive flows. Bids at 1.2275-80 held in early Europe and it moved up to 1.2310. Further topside movement was stymied as European stocks gave back early gains, leaving the CHF on a slightly firmer footing. USD-CHF was a little easier compared with highs around 0.9200 on Thursday and it traded towards 0.9160. However, into the weekend risk taking is relatively low and it should continue to find support on dips.

[USD, CAD]
USD-CAD continues to trade under 1.0000, which held over the course of Thursday's North American afternoon. The downturn in the risk backdrop resulted in morning gains for USD-CAD on Thursday, with the pairing grinding its way up ahead of 0.9930 in Europe and up through offers from 0.9990 in the North American morning. Heavier offers were reported into 1.0000, and with risk appetite fairly steady, albeit at lowered levels, there was not be enough impetus to push parity today. Stops are still seen at 1.0010, though will likely remain save until the Canadian employment report.