USD/JPY and the JPY crosses recovered some of the deep Asian losses. Good interest from Asian sovereigns and a quasi-official account marked a recovery from the lows. USD/JPY found support at 119.80, with standing bids noted from importers, sovereign names and a quasi-official account.
The recovery was limited to 120.35 though, with speculative selling persistent, along with option related activity. Large 120.00 strikes reduced volatility and this lack of movement continued into the North American session. EUR/JPY traded in a similar pattern, recovering from 157.40 up to 158.00. However, bond related selling from a German and a French account pushed the pair back towards the 157.70 region.
Near-term bias for both pairs remains on the downside after the much stronger-than-expected Q4 GDP. However, Japanese political pressure has increased urging BOJ to look at the weak spots that remain in the economy. JPY commentators note weakness in some leading indicators, which could influence BOJ's hand at next week's policy meeting. The risk of rate move is 50-50 now, which will result in choppy price action into Tuesday"s meeting.
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