The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.30 level and was capped around the ¥89.30 level. As expected, the Bank of Japan December quarterly Tankan survey was released overnight and evidenced an improvement in corporate sentiment among large manufacturers. The headline diffusion index improved to -24 from -33 in the September quarterly survey, marking the third consecutive quarterly improvement. Sentiment among large non-manufacturers improved to -22 in December from -24. On a negative note, it was reported that large firms plan to reduce capital spending by 13.8% in the fiscal year ending in March, a downward revision from the 10.8% decline expected in the September tankan. Collectively, these data paint a mixed picture that evidences some improvement in current sentiment but a less-than-sanguine outlook for the future. Traders cite an increasing chance of actual yen-selling intervention by Japanese monetary authorities if the yen remains at elevated levels. Japanese officials reconfirmed overnight that the Hatoyama administration plans to cap Japanese government bond sales at ¥44 trillion in fiscal year 2010. The Nikkei 225 stock index lost 0.02% to close at ¥10,105.68. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥129.15 level and was capped around the ¥130.65 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥143.10 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.35 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8292 in the over-the-counter market, up from CNY 6.8277. People's Bank of China official Zhu Min last week reported China can experience more than 8% economic growth. Zhu added China had good reason to devalue its currency during the global financial crisis but instead decided to stabilize the renminbi exchange rate. The State Administration for Foreign Exchange said China will continue to implement foreign exchange reforms and PBoC indicated it will improve policy flexibility. Data released in China on Friday saw November industrial production up 19%. Also, November consumer price inflation was up +0.6% m/m.