USD/JPY rebounds above 146.00 as Japan's PMI steadies – BBH

USD/JPY recovered above 146.00 after testing a two-week low yesterday around 145.86, BBH FX analysts report.

BoJ rate hike odds limited

"Japan private sector growth traction held steady in July. The composite PMI printed at 51.5 for as second consecutive month in July. The increase in service sector activity (53.5 in July vs. 51.7 in June) was offset by a contraction in manufacturing output (48.8 in July vs. 50.1 in June)."

"Japan’s swaps market still price-in 80% odds of a 25bps Bank of Japan rate hike to 0.75% in December. In the next two years, markets imply just 50bps of rate increases. In our view, the BOJ’s cautious normalization cycle limits JPY upside."