China/HK Equity Losses Drive Modest Yen Outperformance

Early USD trends saw JPY and CHF weaken further, as we saw carry over USD gains from the end of last week. This moves have reversed though, amid China and Hong Kong equity losses (property concerns again a factor). The USD BBDXY index is little changed overall, last near 1235.

• USD/JPY got to highs of 146.60 earlier, but we now sit back sub this figure level (around 0.20% stronger in yen terms versus end US levels from last Friday). USD/CHF is back under 0.8500 this afternoon.
• Weaker China and Hong Kong property sentiment has been evident, as concerns around developer debt, earnings and onshore property sales momentum all weigh.
• This has also weighed on some commodity prices like iron ore, but AUD/USD sits only down a touch at this stage, last near 0.6760. NZD/USD is off by around 0.20%, last tracking under 0.6240.
• This leaves NZD/JPY down around 0.40%, back under the 91.00 level.
• On the data front we had Q2 capex from Japan earlier, which is pointing to positive Q2 GDP revisions (data is out next Monday), but there was little net benefit to yen.
• In Australia, Q2 business indicator data showed that inventories are unlikely to swing Wednesday’s GDP significantly. Company profits were very weak down 5.3% q/q to be 3.9% y/y lower driven by the mining sector. Building approvals data showed positive signs for supply.
• The China Caixin manufacturing PMI rose back above 50.0 but hasn't been a positive for sentiment.
• US equity futures are down slightly, off around 0.20%. US Tsy futures have been very quiet, with no cash trading today due to the Labor Day holiday in the US.
• It's a quiet offshore start to the week, given the US holiday. In the EU, some focus will rest on PMI revisions for August.