The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥112.65 level and was capped around the ¥114.00 figure. Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥115.90 to ¥107.20. Data released in Japan today saw November core CPI up for the second consecutive month, up 0.4% y/y and above expectations. Overall CPI was up 0.6% and the core CPI data are important because they suggest price conditions may be improving sufficiently to justify a 25bps rate hike by Bank of Japan in H1 2008. Other data released overnight saw November retail sales up 1.6% while November industrial output fell 1.6% m/m and was up 2.9% y/y. Also, the November unemployment rate fell back to 3.8% from 4.0% in October. The Nikkei 225 stock index lost 1.65% to close at ¥15,307.78. Dollar bids are cited around the ¥112.50/ ¥111.75 levels. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥165.00 figure and was capped around the ¥166.45 level. The British pound lost ground vis-à-vis the yen as sterling tested bids around the ¥225.10 level and was capped around the ¥227.60 level while the Swiss franc appreciated vis-à-vis the yen and tested offers around the ¥100.30 level. In Chinese news, the yuan’s central parity rate vis-à-vis the U.S. dollar was set at a record low 7.3046 yuan vis-à-vis the U.S. dollar.