The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.55 level and was capped around the ¥90.15 level. Traders are awaiting Q4 2009 gross domestic product data that will be released on Monday and they are expected to show annualized growth of 3.6% for the October through December period, up from the 1.3% expansion in the third quarter. Even if output is reported to have expanded, Bank of Japan Governor Shirakawa reported this month that there is still a long way to go. Other data released in Japan this week saw December machinery orders up 20% m/m, defying expectations of an 8% increase. It was also reported that January producer prices declined for a thirteenth consecutive month, off 2.1% - the longest streak in six years. Even though this was better than December's 3.9% slide, the negative print coincided with increases in commodity costs and these data simply reaffirm the deflationary pressures evident in the economy from a lack of final private demand. BoJ Deputy Governor Yamaguchi this week warned economic growth may stall temporarily and said growth may be in a pretty severe state through this summer, so we can't really expect a rapid expansion. The Nikkei 225 stock index lost 0.19% yesterday to close at ¥9,932.90. 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 ¥122.05 level and was capped around the ¥124.15 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥140.95 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.25 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8338 in the over-the-counter market, up from CNY 6.8320. People's Bank of China reconfirmed it will gradually guide monetary conditions back to normal levels from the counter-crisis mode. Data released in China today saw the M2 money supply up 26% y/y and it was reported that CNY 1.39 trillion of new loans were issued last month. Also, January producer prices expanded 4.3% y/y and consumer prices came in lighter-than-expected, up +1.5% y/y. There is some speculation that the yuan has depreciated over the past couple of days ahead of the Chinese New Year as a signal that China is displeased with the U.S.'s recent military deal with Taiwan.