The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.85 level and was capped around the ¥93.40 level. Bank of Japan maintained its assessment of the economy overnight, reporting Japan's economy has been picking up mainly due to improvement in overseas economic conditions and to various policy measures. BoJ reiterated the economy still lacks momentum to support a self-sustained recovery in domestic private demand. Nikkei reported BoJ Governor Shirakawa and Prime Minister Hatoyama will meet regularly to discuss the economy. The central bank also reported corporate sentiment is improving, capital spending is leveling out, and the deceleration in consumer prices will moderate. Data released in Japan overnight saw the February current account total print at ¥ 1.47 trillion while February machine orders were off 5.4% m/m and 7.1% y/y. Also, March bankruptcies were off 14.5% y/y and March machine tool orders were up 262.1% y/y. Additionally, the March economy watchers' survey improved at the both the current and outlook levels. The Nikkei 225 stock index lost 1.10% to close at ¥11,168.20. U.S. dollar offers are cited around the ¥96.85 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥123.40 level and was capped around the ¥124.60 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥140.95 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.15 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8243 in the over-the-counter market, down from CNY 6.8255. The move higher in the yuan was expected by most dealers as simmering tensions between the U.S. and China have thawed a little bit in the run-up to next week's meeting in Washington, D.C. between leadership from the two countries. Treasury Secretary Geithner met with Chinese leadership in Beijing today to stress the importance of bilateral relations. People's Bank of China sold about CNY 15 billion in three-year bills today, its first sale since June 2008 and the central bank's latest attempt to drain liquidity and manage money supply growth. There is a growing sense that China is close to announcing an important shift in its currency policy, possibly including a further liberalization of the yuan's exchange rate.
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