JPY headed lower as risk appetite improved following the mooted U.S. policy measures to take on toxic debt. USD/JPY extended its Asian high to challenge offers in the 107.25-50 area and the JPY crosses also firmed up, with EUR/JPY recording 152.42 highs and GBP/JPY closes in on 193.00. The JPY is seeing good direct selling from fund names, although some of the move has been direct interest to buy the dollar amid reports of repatriation by funds ahead of the quarter-end. The steady flow back in to the dollar may dampen upside potential for the JPY crosses, with the European majors and commodity bloc currencies likely to struggle as a result. Meanwhile, conditions in the JPY forward market have improved dramatically after yesterday’s coordinated liquidity effort by global central banks and the talk of U.S measures. 1-mth forwards were around -96 on the “left” and now show -35, although spreads have still been as wide at 20 pips in a market that is usually 0.2-0.3. Japanese corporate have been panicking about filling their quarterly requirements, but have been soothed by the improved conditions.