It's all change for the NOK after the hammering it received Wednesday. SEB notes that Wed.'s Q&A session with the Norges Bank revealed a strong commitment to keeping NOK weak as long as recession and deflation fears persist. And so much for its safe haven status; it's just too illiquid. EUR/NOK now steady at 8.8008.

NZD/USD stronger early

NZD/USD stronger early, but off overnight highs tapped when USD fell sharply on comments by U.S. Treasury Secretary Timothy Geithner who said is open to considering a new global reserve currency. Kiwi lost ground after USD pared losses when Geithner clarified remarks, says USD still world's dominant reserve currency, likely to remain so for a long period of time. Pair touched 0.5722 overnight, last 0.5634 vs 0.5603 late yesterday. Locally, market will be keen to see 4Q current account deficit late this morning.

Hungarian bonds firm

Hungarian bonds firm, with the shorter end of the curve also benefitting from the debt center's upcoming bond buyback auction Wednesday. On longer maturities, however, offers continue to outnumber bids with foreign investors on the selling side, a trader says. 3-year yields are at 12.05%, 5-year at 11.85% and 10-year at 11.30%. "Yields could come down further as long as international sentiment remains supportive," the trader notes. Adds however  that uncertainty will persist as long as the new government is unknown. EUR/HUF is at 300.90, largely unchanged from the morning.

After Americans lost nearly 18% of their combined wealth

After Americans lost nearly 18% of their combined wealth in 2008, the odds of inflation are negligible, BofA-Merrill's Drew Matus says. But the odds of deflation are much higher. "Consumer deleveraging and wealth destruction both point toward heightened deflationary pressures," he writes. "History suggests a strong correlation between falling wealth and rising savings and the 18% drop in net worth should add to the deflationary trends."

The Hungarian forint rallies

The Hungarian forint rallies as sentiment is bolstered by the Swiss central bank's moves Thursday. "Swiss action, together with the local central bank's promise of intervention, has probably managed to stop the panic in the market and could lead to a temporary HUF stabilization," a dealer says. EUR/HUF is at 293.10 versus 298.20 Thursday afternoon. Dealer sees room for HUF to firm further near term, and dip as low as 280 vs EUR, but warns that HUF-related risks remain intact and these could eventually push the cross above 300 again.