The dollar eased in Europe as stocks rallied. Central bank diversification supported EUR, GBP and AUD on dips. The jump in German manufacturing orders by 3.9% m/m added to the supportive tone ahead of the N.Y. open, while eurozone Q3 GDP was confirmed at -0.1% q/q. The U.K. trade deficit came in worse than expected at GBP 9.5 bln after exports fell 1.6% and imports rose 2.3%. Specs added some swissy shorts ahead of tomorrow's SNB policy review after Swiss CPI unexpectedly fell to -0.4% y/y. The immediate focus are today's decisions from the BoE and ECB, though unchanged policy is widely expected. However, the ECB will release a new set of forecasts for growth at the press conference and Draghi should leave the door open for further measures. The U.S. calendar brings just weekly jobless claims, though with the official employment report due Friday, trade is likely to slow early. In Canada, Ivey PMI is due, along with building permits.

[EUR, USD]
EUR-USD traded on a firmer footing ahead of the ECB policy outcome. However, FX activity was generally quiet and the low market participation probably added momentum to the move. European stocks posted modest gains, with resource stocks edging higher, which weighed a touch on the dollar, along with central bank diversification. A Middle Eastern name was active, along with sporadic Asian interest, but offers from 1.3080 to 1.3100 held. EUR longs are still in control at current levels, but a move towards 1.3000 would change the near-term picture. Sell stops are noted through 1.3020 and expected to increase in size under 1.3000. Offers remain heavy over 1.3100, with the focus still on interest from 1.3130 to outstanding 1.3150 barriers.

[USD, JPY]
JPY is consolidating losses, leaving USD-JPY close to 82.50, where plain vanilla option strikes are rolling off. Yesterday's latest Japanese election polls reinforced expectations that LDP leader Abe will win an outright majority, which will make it easier for him to pursue more aggressive policy stimulus next year. BoJ have tried to assert its independence in recent weeks amid a pick up in electioneering, but three board members are due to step down in March-April 2013, including BoJ Governor Shirakawa, which will enable Abe to push on without resisitance. USD-JPY risk is on higher levels, though excessive positioning, option barriers from 82.90 and Friday's NFP data is limiting interest for now.

[GBP, USD]
Cable was supported from 1.6080 by good standing bids and Middle Eastern demand, which lifted it back over 1.6100. The pair is expected to maintain tight ranges around 1.6100 due to the influence of large option strikes at 1.6100 that have been in the market for the last two sessions. Adding to sterling demand on dips is the recent news that HSBC will sell its 15.6% stake in Ping An insurance to Thailand's Charoen Pokphand Group. EUR-GBP corporate hedging is noted on upticks, leaving it close to 0.8110-20. The Cable upside is restricted by hedging activity ahead of year-end at 1.6125-30, along with option barriers at 1.6150. The market shrugged off yesterday's fiscal neutral Autumn Budget despite it raising the risk of a U.K rating downgrade.

[USD, CHF]
EUR-CHF is held to 1.2100-10, where option expiries are due to roll off today. The cross posted a sharp correction from yesterday's 1.2068 high. Some specs got caught long after the market got carried away with Swiss policy risk following the decision by large Swiss banks to charge up to 1% on CHF deposits. We do not think this is a precursor to capital control measures or negative deposit rates, with the situation in the eurozone arguably on a slightly more stable footing, while the global growth outlook may be better next year if China and the U.S. push on. However, today's Swiss CPI data does highlight the importance of SNB's policy stance after CPI unexpectedly fell to -0.4% y/y from -0.2% and there may be some speculative swissy shorts that are put on ahead of Friday's SNB policy review. USD-CHF is supported around 0.9275-80, but offers from 0.9300-10 continue to cap.

[USD, CAD]
USD-CAD in now in the ninth consecutive session trading just above the 0.9900 level, while over the same time frame, the highs have generally be around the 0.9950 area. Asian stocks struggled, offering little impetus to buy CAD, but a modest rally in Europe drove USD-CAD back to 0.9905. Should equities be able to add to their gains, we may see some more interest in taking out stops under the figure. Dealers report bids at 0.9900, though it remains to be seen if the market has enough ammo to grind through the buyers to expose stops. A clean break of this level would open up early November lows around 0.9875.