The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥93.60 level and was supported around the ¥92.75 level. Traders await the release of the all-important Bank of Japan Tankan survey of corporate sentiment tonight with most forecasts focusing on an improvement in the main large manufacturers' confidence index to -14 from the prior reading of -24. Other components include the large manufacturing outlook, large non-manufacturing outlook, and capex numbers with large all-industry capex expected to improve to -0.4% in Q1 from -13.8% in Q4. Even though the Tankan is expected to evidence improvement across the board, the survey does little to address the weak final private demand in the country and the deflationary problems evident in the economy. Data released in Japan overnight saw March small business confidence improve to 45.8 from the prior reading of 42.3while February housing starts were off 9.3% y/y to an annualized 794,000. Additionally, February construction orders were off 20.3% y/y and February total cash earnings data were off 0.6% y/y. Today is the final day of Japan's fiscal year-end and most dealers believe the yen will continue to depreciate early in the new fiscal year. The government will boost Japanese government bond issuance to a record ¥144.3 trillion in the fiscal year beginning tomorrow. The Nikkei 225 stock index lost 0.06% to close at ¥11,089.94. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥126.45 level and was supported around the ¥124.40 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥141.80 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.80 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8259 in the over-the-counter market, up from CNY 6.8257. It was reported that Chinese banks purchased US$ 978 billion in foreign currency for their clients in 2009, selling yuan in the process. People's Bank of China reported the economic recovery has been further cemented and added the management of liquidity following the record credit expansion has become arduous. PBoC called on China to urgently adjust its economic model and said it must utilize multiple monetary tools flexibly. Some traders believe China may widen the yuan's trading band in the second quarter.
Join the Discussion