Yen maintains strength after Japanese GDP data

USD/JPY took a dive in early Antipodean trading, down from 118.88 through bids at 118.40-50 and stops below to 118.11 in thin conditions. Tokyo’s return sent it back up into a 118.53-76 range before a fresh push down to @118.40. One large flow was seen behind the early push down. Tokyo players cited semi-official Japanese pension fund buys as helping to push USD/JPY back up and helping the Nikkei up after its open despite a weaker than expected Q4 GDP report. Annualized, growth came in at 2.2%, recovering from -2.3% in Q3 but well below the +3.7% eyed. Despite the data miss, the Nikkei gapped up and traded to a fresh 8-year high. Higher US yields was supportive. EUR/JPY see-sawed between 134.90-135.49 with dealers cautious over an EU-Greek deal tonight. GBP/JPY traded 182.28-183.06 and AUD/JPY 91.86-92.38. NZD/JPY rallied from 88.02 to 89.03 on good NZ retail sales data. Trading in general was quiet ahead of tonight’s US holiday and Lunar New Year holidays in the region from Wednesday.

EUR/USD was dragged up from 1.1385 to 1.1425 at the start of Antipodean trading on the plunge in USD/JPY. As USD/JPY reverted higher, EUR/USD fell back to levels seen at the New York close Friday. A low of 1.1380 was seen before support returned on EUR/JPY demand out of Tokyo and a push back up towards early highs. The market looks to be very short still and there may be more probes up as it awaits news from the EU-Greece talks later today. Latest reports suggest any deal to be still far away. Sizeable offers are eyed towards 1.1500, a level seen chock-a-block with optionality.

GBP/USD was bid, up marginally from 1.5395 to 1.5437 and extending gains seen last week on hawkish comments from BoE officials over the weekend. EUR/GBP did little, holding between 0.7388-0.7409 but eyeing another leg down. Stops are eyed below 0.7370, 0.7372 the trend low last Thursday.

USD/CHF traded 0.9288-0.9325, holding under the 0.9337-38 trend high last week. EUR/CHF fell back modestly from 1.0630 to 1.0600 but with the market still wary of SNB intervention.

AUD/USD opened in Asia at 0.7765 and dipped to 0.7760 early before bouncing later to 0.7795 in line with the ebb-flow of USD/JPY. Light stops were tripped on the break above 0.7790 but further moves up limited on offers ahead of 0.7800. AUD/NZD weakness may have helped cap it with the cross down from 1.0421 to 1.0365 on strong NZ retail sales data. The all-time cross low from early January is at 1.0358, and decent stops are eyed sub-1.0350.

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