The dollar took off higher on Friday, aided by softer China and Europe PMI's better U.S. data, and fear over U.S. sequestration. Strained Boehner and Obama headlines indicated both sides could remain apart on any deal perhaps even until the "continuing resolution" at the end of the month, which would shut down the government without a quick fix. Equities managed to hang in there nonetheless, but the dollar was a clear winner on the back of safe haven flows. EUR-USD traded under 1.2970 after peaking at 1.3100 in London, while USD-JPY ramped up over 93.60 following rumors of an imminent emergency BoJ meeting. Cable traded under 1.5000 for the first time since early 2010. The loonie benfited from as-expected Canadian growth data, and better U.S. data.

[EUR, USD]
EUR-USD broke 2013 lows to trade under 1.3000 on heavy U.S. account selling. The move was dollar-related after the USD-index broke 82.00 for the first time since mid-late August 2012. Big EUR-USD stops gave way between 1.3000 and 1.2990, while USD-CHF also saw heavy lifting from CTAs that were persistent buyers from 0.9370 to trade over 0.9420. The precipitous decline in Cable had a big impact today, though sources cited very good dollar flows generally from real money accounts. There are a lot of EUR barriers to overcome on the downside from 1.2975 to 1.2900, while on the daily chart 1.2930 will be a level to watch from December-11 lows. Under there, and more likely to be a more difficult proposition, are support levels at 1.2875-80, which held on three downside tests in late November. EUR-USD did benefit in late day trade on pre-weekend short covering, helped by a rebound in equities, despite the cloud of U.S. sequestration.

[USD, JPY]
USD-JPY traded to session highs at 93.65, and up from 92.75 in morning dealings. There was some talk out of London of an "emergency" BoJ meeting, which may have provided some support. Offers were noted at 93.50 from Japanese accounts, which capped the upside for a time, but as stocks rallied back, the paigin marched higher into the close. There is a lot of event risk to digest out of Japan in the coming weeks and March is often a significant month due to fiscal year-end related flows. On March 11th Kuroda will present in the Diet and this will be a big day for the future policy outlook ahead of the March 15th vote on the BoJ Governor role.

[GBP, USD]
Cable breached 1.5000 to reach 32-month lows under 1.4990. Today's very poor manufacturing PMI raised the debate over BoE policy easing and there are some analysts that even tip a move next week. However, manufacturing makes up just 10% of the U.K. economy and other U.K. data hasn't been too bad of late. Next Tuesday's U.K. services PMI is going to be more important for policy and where the pound goes next. There are some very bearish long term forecasts now and several leading money managers are short, including Soros, who infamously triggered sterling's crash out of the ERM in 1992. On the downside, support levels at 1.4965 to 1.4950 could attract in the coming sessions.

[USD, CHF]
EUR-CHF steepened its bid over 1.2200 and briefly traded through 1.2250 resistance on its way towar 1.2290. Early demand was noted out of the local market after the cross was aided by a stop hunt in USD-CHF during Thursday's N.Y. session. CTA interest got filled over 0.9350 and 0.9370 as the dollar picked up momentum on good U.S. data and today's sequester, which limited appetite for EUR, GBP and the commodity bloc currencies. Today's Swiss manufacturing PMI missed expectations by a fairly wide margin at 50.8 from market expectations of 52.1, but rather than weighing on the CHF it fueled a EUR-CHF move from 1.2250-55 to 1.2235. However, USD-CHF buying drove intra-day moves and a run over 0.9400 kept the cross elevated around 1.2250 late on in the European morning.

[USD, CAD]
USD-CAD eased back following the in-line Canadian GDP outcome, moving from trend highs over 1.0340 to under 1.0310 before regaining composure. The pairing had been bought up ahead of the release on talk of a softer growth outcome. The pairing took a quick peek at the 1.0300 level later, but was met for a time with good buying interest. Corporate names were on the bid, while intra day accounts reloaded long positions. Later though, as U.S. data improved along with the risk backdrop, stops are at 1.0290-80 were triggered resulting in lows of 1.0275.