The yen weakened vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥111.85 level and was supported around the ¥111.35 level. The pair reached its strongest level since 9 November as traders positioned themselves ahead of tomorrow’s FOMC interest rate decision. Data released in Japan overnight saw core private-sector machinery orders up 12.7% m/m to ¥1.08 trillion in October, the first improvement in three months and above expectations. Also, November bank lending was up 0.7% y/y, the same rate as October’s increase, while the M2 + CD money supply was up 2%. The government’s economy watchers’ survey was released overnight and declined for the eighth consecutive month in November, printing at 41.5. Most traders believe BoJ’s Policy Board will keep the overnight rate unchanged at 0.5% for at least several months. The Nikkei 225 stock index lost 0.20% to close at ¥15,924.39. Dollar bids are cited around the ¥109.25 level. The euro gained ground vis-à-vis the yen as the single currency tested offers around the ¥164.56 level and was supported around the ¥163.20 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥228.70 and ¥99.40 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.3954 in the over-the-counter market, down from CNY 7.4030. Data released in China overnight saw November PPI up 4.6% y/y. China’s banking regulator sees 2007 CPI above 4.4%. People’s Bank of China announced it will raise the reserve requirement on bank deposits by 100bps to 14.5%, effective 25 December. An unnamed source also announced that China’s trade surplus totaled US$ 26.28 billion in November, taking the year-to-date total to US$ 238.12 billion.