The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥93.35 level and was supported around the ¥92.75 level. 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. 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 this week called on Japan to enact a credible medium-term fiscal plan. Bank of Japan Governor Shirakawa warned complacency is the most dangerous risk for central banks and said over-confidence damaged Japan and the U.S. Finance minister Kan said concerns over Japan's terrible debt situation will ease when a new fiscal plan is issued. Data released overnight saw March supermarket sales off 6.6% y/y. The Nikkei 225 stock index lost 1.27% to close at ¥10,949.09. 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 ¥123.30 level and was capped around the ¥125.15 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥142.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.00 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, down from CNY 6.8275. People's Bank of China sold bills at lower yields for the first time in fifteen months, evidencing the banking system's large surplus of cash. Many China-watchers believe China may allow the yuan to appreciate at any time between now and the end of the quarter.
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