The yen appreciated marginally vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥107.90 level and was capped around the ¥108.30 level. The pair’s range was quite narrow ahead of tonight’s comments from Bank of Japan Governor Fukui. Data released in Japan overnight saw the December all-industries index fall 0.2% m/m, an improvement from November’s 0.5% decline. The December tertiary index was off 0.6% m/m in December while the construction industry index was off 0.1%. The big news in Japan overnight was a report that Japan’s merchandise trade deficit surged to ¥79.34 billion in January from ¥3.49 billion one year earlier. The Nikkei 225 stock index gained 2.84% to close at ¥13,688.28. Dollar bids are cited around the ¥106.90 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥159.55 level and was supported around the ¥158.90 level. The British pound appreciated vis-à-vis the yen as sterling tested offers around the ¥211.95 level while the Swiss franc weakened vis-à-vis the yen as the pair tested bids around the ¥209.70 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.1413 in the over-the-counter market, down from CNY 7.1436 – the pair’s lowest close since the yuan revaluation of July 2005. The Chinese government reported it expects China’s 2008 trade surplus to be around US$ 320 billion, up 22%.