CNY/USD Fundamental Outlook at 1500 GMT (EST + 0500)

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.95 level and was capped around the ¥93.40 level.  Bank of Japan Deputy Governor Nishimura reported Some beams of light are starting to break through a thick cloud of deflation.  The effects of the pickup in the economy since the spring of 2009 can be considered to spread over to prices only from now on.  There is increasing speculation the BoJ will raise its outlook for the economy and prices next week amid positive improvements in certain economic measures including the export sector, the unemployment rate, and consumer confidence. Nishimura added the possibility of a double dip recession has diminished.  The Democratic Party of Japan reported it will likely call for an inflation target for the central bank in this year's election platform.  It is likely legislators will try and prompt the central bank to seek inflation of up to two per cent.   The International Monetary Fund today called on Japan to enact a credible medium-term fiscal plan.  Data released in Japan overnight saw the February leading index improve to 98.5 while the February coincident index ticked lower to 100.5.  Also, the March merchandise trade balance total expanded to ¥1.020 trillion.  The Nikkei 225 stock index climbed 1.74% to close at ¥11,090.05.   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 ¥124.25 level and was capped around the ¥125.50 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥144.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.70 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8254.  Reserve Bank of India's Subbarao and Central Bank of Brazil's Meirelles called on China to let the yuan appreciate.  Many China-watchers believe China may allow the yuan to appreciate at any time between now and the end of the quarter.