The yen depreciated sharply vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥112.45 level and was supported around the ¥110.60 level. Technically, today’s intraday high was just below the 61.8% retracement of the move from ¥115.90 to ¥107.20. Risk appetite returned to the market following a concerted effort by global central banks to provide a significant amount of year-end liquidity to the markets. Traders added to short yen exposure across the board under the premise Bank of Japan is unlikely to raise interest rates anytime soon; BoJ’s Policy Board next meets on 19-20 December to deliberate monetary policy. Data released in Japan overnight saw the November domestic corporate goods price index up +0.2% m/m and 2.3% y/y. Also, the October current account surplus increased 45.7% y/yto ¥2.229 trillion in October, the tenth consecutive monthly increase. Moreover, November portfolio flows saw a net ¥4 trillion inflow into Japan’s financial markets. Traders await Friday’s release of the quarterly tankan survey of business sentiment with expectations for a decline in business optimism and capital spending plans. Other data released today saw November revised machine tool orders up 13.0% y/y and November corporate failures down 16.3% m/m. The Nikkei 225 stock index lost 0.70% to close at ¥15,932.26. Dollar bids are cited around the ¥110.70 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥165.05 level and was supported around the ¥162.15 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥230.35 and ¥98.95 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.3721 in the over-the-counter market, down from CNY 7.3805 – a record post-July 2005 yuan revaluation closing low. PBoC Governor Zhou reported China favours a stronger U.S. dollar. Data released in China today saw November retail sales up 18.8% y/y while November wholesale prices were up 7.4% y/y.