The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.40 level and was supported around the ¥89.60 level. Data released overnight saw January consumer confidence improve to 39.0 from 37.6 in December. 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 climbed 1.29% to close at ¥10,092.19. 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 ¥121.35 level and was capped around the ¥123.10 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥139.75 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.80 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8333 in the over-the-counter market, down from CNY 6.8338. One day after People's Bank of China reconfirmed it will gradually guide monetary conditions back to normal levels from the counter-crisis mode, the central bank lifted reserve requirements by 0.5%, effective 25 February. The central bank is clearly trying to contain inflationary pressures and avert asset bubbles. 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 and Obama's plans to meet the Dalai Lama.