The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.05 level and was supported around the ¥93.25 level. As expected, Bank of Japan's Q1 Tankan survey of corporate sentiment improved q/q with the large manufacturers' index up to -14 from -24 in Q4 and the non-manufacturer's index higher at -14 from -22. Also, the large manufacturers' outlook improve to -8 from -21 in Q4 and Q1 all-industry capital expenditures improved to -0.4% from -10.8%. Today's improvement represented the Tankan's highest levels in eighteen months but they do not necessarily mean Japan's economy will evidence a marked improvement, especially as final private demand remains tepid and deflation remains a significant problem. There is market chatter that Bank of Japan will lift its assessment of the economy at the BoJ Policy Board meeting on 6-7 April, possibly on account of greater export activity. BoJ's 30 April Policy Board meeting will include its semi-annual economic projections and could be the meeting when Policy Board members adjust policy further following last month's additional easing steps. There will be an Upper House election in July and politicians will likely pressure the central bank to make policy easier far in advance of that election. The Nikkei 225 stock index gained 1.39% to close at ¥11,244.40. 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 ¥127.50 level and was supported around the ¥125.95 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥143.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥90.00 figure. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8264 in the over-the-counter market, up from CNY 6.8259. Data released in China overnight saw March manufacturing PMI improve to 55.1 from 52.0 in February. People's Bank of China reported yesterday it will continue its moderately loose monetary policy.
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