The FX market is clearly pricing in a significant probability of a hawkish development such as widening the YCC trading band for the 10-year JGB or sending a strong message that the end of YCC is not far. We prefer to fade market sentiment and see better asymmetry in looking for a disappointingly dovish outcome. 

We stick tight to our USD/JPY 135-152 forecast range for the quarter and would expect spot to target 145 quickly if the BoJ meets our expectations, especially if the Fed’s hike this week is not interpreted as a dovish one.