The
swings for USD/JPY continued again today, with the pair heading up to
around 146.60 before dropping back to under 146.00. As I post its
around 145.85.

We
had data from Japan today, a solid result for Q2 Capex, well ahead of
the Q1 result although not by as much as expected. The result is
indicative of a bounce back in domestic demand (driven by business
investment) and provides another plank of support for further Bank of
Japan interest rate hikes to come.

Speaking
of data, we had China’s official PMIs for August published on
Saturday showing manufacturing slipping further into contraction
while services were in expansion. Today, Monday, we also got the
manufacturing PMI from Caixin / S&P Global. This privately
surveyed PMI showed expansion for the manufacturing sector. The
Caixin index tends to focus more on small, export-oriented firms,
suggesting that these smaller manufacturers are showing resilience.
According to Caixin, factory production increased for the 10th
straight month in August, driven by growth in consumer and
intermediate goods sectors. Trading
in the offshore yuan followed a similar pattern to the Yen. USD/CNH
traded
to highs around 7.1080
before
dropping back towards 7.1020.

As
a reminder, today is a US market holiday. US
cash equity markets are closed. The Securities Industry and Financial
Markets Association (SIFMA) is recommending the US Bond market closed
today. FX trade will be much lighter than usual. There is a post with
futures market opening hours above.