JPY Outperforms On Yield Spreads, Asia FX Activity Still Limited

Asia-Pac FX volume remains hampered by holidays related to the Lunar New Year, with interbank activity 25-30% below the recent norms, per several desks.

• The broader USD (BBDXY) is a touch softer on the day, with Tsy yields lower. Spill over from wider Wednesday trade and a softer-than-expected Australian labour market report were the most obvious catalysts on that front.
• AUD has pared a fair amount of the shallow knee-jerk losses seen in the wake of the domestic data.
• JPY is the G10 FX outperformer, with focus on yield spread moves as opposed to data that revealed a surprise technical recession in Japan in Q4.
• GBP trades a touch softer in the wake of softer-than-expected Q4 GDP UK data (a technical recession was also confirmed in the UK), while the 3-month/3-month index of services metric was also softer than expected.