Heavy flows were noted after the G7 reaffirmed its commitment to market determined exchange rates. As always, the devil is in the detail and the wording indicated an agreement on policies orientated towards meeting domestic objectives using domestic instruments, which was taken as a greenlight to Japanese policy as long as it targets "ending deflation and boosting growth". USD-JPY traded back to trend highs around 94.40 and EUR-JPY was boosted towards 127.00. SNB's Jordan also weighed in with policy remarks and said it will take additional measures if necessary and maintained that the franc was still strong at current levels, which lifted EUR-CHF to 1.2350. Pronounced GBP weakness was evident on heavy fund selling, which forced Cable under 1.5600 and lifted EUR-GBP well above 0.8600. The cross flows were a big boost to EUR-USD, though EU's Juncker also said there is no optimal level for EUR, which helped it on its way from just under 1.3400 to the 1.3465 region.

[EUR, USD]
EUR-USD was boosted by cross-flows, which lifted it out 1.3370-80 to trade into 1.3450. In the absence of strong leads, early European accounts took their guidance from last week's Draghi comments after yesterday's eurogroup meeting talked about the EUR, but backed away from a co-ordinated approach on policy. This was widely expected judging by comments leading up to the meeting, where only France was pushing for more oversight. Since then, we've had dovish policy rhetoric from SNB's Jordan and a G7 commitment to market determined exchange rates. The statement said policies can remain orientated to domestic objectives using domestic instruments, which gave Japan the nod to continue with the current policy path. EUR-CHF has taken off from 1.2300 just over 1.2350 and EUR-JPY rallied out of 125.60 to trade over 126.80. Meanwhile, EUR-GBP is pushing its weight back over 0.8600 as sterling continues to suffer from poor fundamentals.

[USD, JPY]
USD-JPY firmed up from 94.00 and traded over 94.25 after the G7 statement on FX gave the greenlight to Japan to pursue its current policy path. Specifically, it said that policies will remain orientated towards meeting respective domestic objectives using domestic instruments, though did add it will not target exchange rates. Japanese policy makers have argued over the last week that its easy policy stance was aimed at boosting growth and ending deflation, but not directly targeting currency devaluation. Japan Finance Minister Aso said that the G7 policy statement confirms that Japan's economic policies are not aimed at currency levels. USD-JPY should remain supportive, but the influence of outstanding barriers from 94.50 and a build up of order congestion towards 95.00 will limit the upside.

[GBP, USD]
GBP was pressured by fund selling ahead of CPI, which lifted EUR-GBP out of 0.8550 to 0.8590, while Cable broke 1.5600. Good interest went through EUR-GBP, but the Cable sell off gained momentum after key support gave way at 1.5630, which fueled stop loss selling and gave the traction for a successful clear our of 1.5600 barriers. Once it broke 1.5600 a good bid from a supranational account was noted around 1.5575 and corporate interest picked up after U.K. CPI and PPI data. CPI met expectations at 2.7% y/y, but U.K. input PPI was stronger than expected. The frothiness in U.K. price pressure is a problem for the BoE given benign wage price inflation, which is keeping a squeeze on household incomes. GBP is likely to remain under pressure with the break under 1.5600 a significant bearish development.

[USD, CHF]
EUR-CHF jumped after SNB Jordan said the risk of extreme FX fluctuations continues to exist and it will maintain the ceiling on the CHF and will take additional measures if necessary. Jordan said that there has been a rebound in global confidence in the markets, but the franc is still strong against the euro at current levels. However, Jordan did not think there was a currency war underway and backed policies with a domestic objective. EUR-CHF moved up from 1.2290 to trade into 1.2350. Early on in the session, Swiss CPI data came in as-expected at -0.3% and did not impact the CHF.

[USD, CAD]
USD-CAD continued to trade on a supportive footing after it added to Friday's gains and made its way back over 1.0080 during the European morning. Offers ahead of 1.0100 slowed the uptrend on Monday and this is likely to keep ranges tight in the North American morning today. Bias should remain on higher levels, with bids likely from yesterday's North American lows around 1.0040 and into 1.0020. Stops are expected to be a factor over 1.0100.