Movement in Asia was limited overall after a quiet session on Monday amid holidays in the U.S. and Canada. JPY firmed up in Asia after Japan Finance Minister Aso said it has no plans to buy foreign bonds and wasn't considering changing BoJ law, which was in direct opposition to comments from PM Abe on Monday. USD-JPY pulled back from the 94.00 region and traded just under 93.60. AUD-USD experienced short covering activity from 1.0300 to 1.0335 after the RBA minutes were as-expected and left the door open for more easing if needed. NZD-USD came under pressure amid reports that NZ milk powder was being destroyed by quarantine authorities in Beijing, though this was later denied by Fonterra. Meanwhile, the EUR traded a very narrow range close to 1.3350 after the 1.3300 and 1.3400 levels held on Monday.

[EUR, USD]
EUR-USD continues to trade close to 1.3350 after it failed to make progress in either direction on Monday. ECB Draghi injected some EUR interest, but overall his comments were in line with his recent post-ECB press conference. He acknowledged that the eurozone was in better shape this year, but said considerable effort was still needed to emerge from the crisis. Draghi reiterated that the exchange rate is not a policy target, but it is important for growth and price stability. There were inflation risks related to weak economic activity and euro appreciation, said Draghi, which fueled a EUR-USD move from 1.3360 to just below 1.3335, but support held from 1.3320. Since EUR-USD broke down after the ECB press conference any upticks have been used as selling opportunities. On the downside, the 1.3300 area has seen increased order flow, while lower down the 1.3260-65 area is still key for the long-term uptrend.

[USD, JPY]
USD-JPY traded between 94.00 and 93.55 throughout the Asian session. There were two rounds of selling pressure, with comments from Japan Finance Minister Aso the catalyst for a small reduction in yen short positions. He ruled out foreign bond buying and said it was not planning to change BoJ law. USD-JPY pulled back from 94.00 and tested support at 93.50-60, which held. Buying interest was noted from short term accounts, which fueled a push back over 93.90, but it was unable to recover 94.00 and trended lower to 93.60 by the Tokyo close. There was mild disappointment that PM Abe will not make a decision on the BoJ Governor until after his visit to the U.S. on February 21-24.

[GBP, USD]
Cable hit new trend lows on Monday 1.5450 barriers were extinguished after the London open. The move lower coincided with reports that fund managers have shunned the pound after CFTC data revealed GBP shorts rose to eight month highs of 16,776 on the Friday release. Sterling bears were emboldened by comments from BoE's Weale, who said it may need to weaken further in order to rebalance Britain's economy. This would be the most natural means of resolving the problem, said Weale in a speech delivered on Saturday. The Cable downside slowed intra-day due to good bids from 1.5430 to 1.5400, where another round of barriers are noted, along with talk of increased sovereign demand on dips. Sellers have now parked offers from 1.5530 to 1.5550.

[USD, CHF]
EUR-CHF is stable ahead of 1.2300. EUR and USD fluctuations have left the cross in a relatively narrow range and this looks likely to continue in the near-term. Bids are supporting from 1.2300 to 1.2280, while a build up of offers are noted from 1.2350. USD-CHF is supported from 0.9200 and just below as EUR-USD continues to meet selling pressure on upticks. Interest to sell USD-CHF is noted from 0.9270 to 0.9300, which are close to previous tops from late January.

[USD, CAD]
USD-CAD broke the top of the recent range after yesterday's London close. CAD$ traded at its weakest levels since late July 2012 after stops gave way through 1.0100. CAD$ has been under pressure since last Friday's weak manufacturing data, but thin trading conditions exacerbated price action on Monday. Bids are likely now from 1.0070-80 and close to yesterday's base from 1.0060. Offers are tipped from 1.0130 and there are outstanding option barriers at 1.0150.