The market maintained a holding pattern ahead of the weekend G20 meeting, which left most of the G10 FX currencies in tight ranges. NZD was the exception after it posted a good rally after a decent consumer confidence reading and a strong manufacturing PMI release. AUD was a touch higher on the coattails of the NZD upturn, but it lacked momentum after the Australian Treasury forecast slower growth. The BoJ kept policy unchanged as-expected, but upped its economic assessment amid signs that the economy has bottomed out. However, it reiterated that it will maintan ultra-easy policy until it reaches its CPI target. Meanwhile, candidate for the BoJ Governor role, Iwata, triggered a brief USD-JPY spike from 93.30 to 93.65 after he said a USD-JPY rate between 90 and 100 was a return to equilibrium. Early European action was influenced by weaker than expected GDP outturns from France and Germany.

[EUR, USD]
EUR-USD traded on an easier footing after it met a plethora of offers just above 1.3450. Failure to sustain levels over 1.3500 yesterday should continue to encourage selling pressure on upticks. There are growing expectations that EUR movement over 1.3500 could be limited by more explict currency rhetoric from European officials. According to reports in the German press the ECB is worried that EUR appreciation could impact the recovery in crisis nations. Movement under 1.3400 may run into better bids between 1.3380 and 1.3350.

[USD, JPY]
USD-JPY traded in familiar ranges either side of 93.50 as Q4 GDP fell 0.4% and the BoJ left policy unchanged as-expected. Both the economic data release and the BoJ decision saw a muted reaction. This was not unexpected though, given the JPY weakness over the last several weeks and of course the pending G20 meeting, which has taken on more significance after the conflicting G7 statements this week. USD-JPY traded between 93.15 and 93.65 and then settled close to 93.50 by the Asian close. Price action was choppy, but it does look as if the topside will remain more limited now with the G20 in focus.

[GBP, USD]
Cable eyes a move through 1.5500 barriers after yesterday heavy GBP sell-off, which came over the BoE Inflation Report and Cable lost more than 150 pips from high to low. The BoE revised up its inflation outlook, but pinned it on temporary factors, leaving its focus on measures to support the economic recovery. The market judged that this makes QE more likely, but King once again warned there were limits to what monetary policy could achieve. There is likely to be some support under 1.5500 from previous lows between 1.5485 and 1.5460 that could slow the downtrend, while offers are likely now into 1.5540-50.

[USD, CHF]
EUR-CHF was unable to sustain higher levels as the pullback in EUR-USD weighed. It headed back to the 1.2320 area, where real money bids were noted in recent sessions. USD-CHF is being supported by safety plays after weaker than expected GDP readings from France and Germany and it rallied back over 0.9200. Buy stops are tipped above 0.9220 and better offers are noted from the 0.9250 region.

[USD, CAD]
USD-CAD remained pressured overnight after it traded under 1.0050 throughout Wednesday's session, though saw buyers have kept the downside underpinned into the 1.0010 region. Decent bids are seen in place at 1.0000, though since the announcement that Canada's Nexen has received all necessary approvals to be taken over by China's CNOOC, the pairing has been sold into modest upticks. The deal, worth about C$15 bln, is expected to close on February 25th, and could continue to weigh on USD-CAD. A break of 1.0000 is expected to trigger sell stops, while offers have been lowered in size from the 1.0040-50 area.