The yen appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the Â¥94.20 level and was capped around the Â¥94.85 level. The yen was up strongly across the board as a downturn in global equities dampened demand for higher-yielding currencies. Data released in Japan overnight saw Q2 gross domestic product expand 0.9% q/q, less than expected but the first improvement since Q1 2008. The improvement means Japan is no longer in a technical recession but many economists believe economic growth may slow to an annualized 2.9% pace in the three months ending 30 September. On the political front, Prime Minister Aso€™s Liberal Democratic Party is likely to lose the upcoming lower house election to the Democratic Party of Japan. Policymakers including Bank of Japan Governor Shirakawa have warned Japan€™s domestic demand is likely to remain very weak. The Nikkei 225 stock index lost 3.10% to close at Â¥10,268.61. U.S. dollar offers are cited around the Â¥104.15 level. The euro moved lower vis-Ã -vis the yen as the single currency tested bids around the Â¥132.50 level and was capped around the Â¥134.50 level. The British pound moved lower vis-Ã -vis the yen as sterling tested bids around the Â¥153.45 level while the Swiss franc moved lower vis-Ã -vis the yen and tested bids around the Â¥87.20 level. In Chinese news, the U.S. dollar gained ground vis-Ã -vis the Chinese yuan as the greenback closed at CNY 6.8332 in the over-the-counter market, up from CNY 6.8314. Chinese equities realized their worst decline since November on account of declining commodities prices and concerns that People€™s Bank of China will tighten liquidity measures.
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