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FXstreet.com (Barcelona) - According to the RBS Asia-Pacific Strategy Team, "2013 is likely to be a long and winding one, though the first kinks are already visible - the US debt ceiling negotiations will heat up in February, with growth-sapping spending cuts the ransom for avoiding a disastrous US government shutdown - or worse, an unthinkable US default." Ahead of that, the Bank of Japan's decision in a couple of weeks has the potential to upset not a few apple carts if it declines to pursue the aggressive inflation target and easing that the market appears to have already fully priced in.

However, in the meantime, the environment appears to be risk-supportive. Liquidity is plentiful and available across the full menu of G4 currencies; locally, Chinese data suggests that growth has bottomed there, and growth elsewhere in Asia is holding in reasonably well. In FX, this backdrop continues to support our three favorites, namely KRW, PHP and THB. Elsewhere, IDR and INR may do okay, although the latter remains dependent upon further action from Delhi. Chinese data will continue to drive CNY/CNH and TWD.

The remaining MYR and SGD may be the underperformers - particularly SGD given the MAS's apparent reluctance to allow further appreciation, even within the NEER band; and given a prospective shift away from safe havens. "Volatility should remain subdued for another couple of weeks - but 1m implies should start to pick up later in the month as the date covers the post-Lunar New Year period ahead of the debt ceiling deadline." they add.

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