The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥107.90 level and was supported around the ¥107.00 figure. Technically, today’s intraday low was right around the 23.6% retracement of the move from ¥110.10 to ¥104.95. Bank of Japan Governor Fukui reported there is a high probability that the Japanese economy will continue its gradual expansion towards the next fiscal year (from April) with stable prices. We are carrying out financial policies strongly confident that we will be able to have a stable economy…by continuing to provide the current accommodative financial environment for the time being. Data released in Japan overnight saw the December core consumer price index rise 0.8% y/y, the largest increase since March 1998, but the rise was mostly caused by higher costs rather than stronger private demand. Minutes from the BoJ Policy Board’s late December meeting saw policymakers pledge to pay closer attention to U.S. downside economic risks. The yen was also pressured on news the U.S. government’s fiscal stimulus package may be enacted shortly and that troubled U.S. bond insurers may be recapitalized, revitalizing demand by Japanese investors and short yen carry trades. The Nikkei 225 stock index gained 4.10% to close at ¥13,629.16. Dollar bids are cited around the ¥104.20 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥159.10 level and was supported around the ¥157.80 level. The British pound gained ground vis-à-vis the yen as sterling tested offers around the ¥214.00 figure and was supported around the ¥211.35 level while the Swiss franc weakened vis-à-vis the yen and tested bids around the ¥97.90 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.2102 in the over-the-counter market, down from CNY 7.2288 and the pair’s weakest close since the yuan revaluation of July 2005. Data released in China overnight saw December wholesale prices up 7.6% y/y from November’s 7.4% pace.