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By Lujia Lin, THE TAKEAWAY: Japanese capital spending plunges YoY, but manufacturing investment rises on the quarter > Economic picture remains mixed, intervention still on the table > Yen flat Chart generated using Strategy Trader The Japanese Yen traded largely flat in spite of data indicating a much larger than expected plunge in capital spending. Immediately following the report, the currency remained within a tight range near 77.75 versus the US Dollar. According to the Ministry of Finance report, total capital spending in 3Q 2011 dropped 9.8 percent from the same period last year, confounding expectations of a 3.6 percent fall. The decline is even more severe than that registered in the 2 nd quarter immediately following the earthquake, in which capital expenditures fell 7.8 YoY. On a QoQ basis, total capital spending fell 2.7 percent, slightly better than the 2 nd quarter’s -6.6 percent print. Manufacturing investment QoQ swung to positive, rising by 3 percent. With economic data continuing to present a very uncertain outlook for the Japanese economy – with the jobless rate rising to a 3-month high in October despite better-than-expected October retail sales and industrial production – markets will continue to focus on possible intervention from policymakers. Partially reflecting concerns about the strong Yen, Prime Minister Yoshihiko Noda on Thursday ordered a fourth emergency reconstruction budget that is expected to top 2 trillion Yen, in addition to the 18 trillion Yen already disbursed in the previous spending packages. Speculation about whether these concerns will translate into further currency-market intervention following the most recent Oct. 31 action will continue to keep Yen traders on edge.