“The messages contained within the BoJ’s July policy adjustment have not been easy to decipher. The BoJ may have been attempting to give itself more flexibility around YCC. However, Governor Ueda’s comments on the exchange rate may have encouraged speculation that JPY weakness will result in more upside in 10 yr yields.”

“This week’s softer than expected Japanese economic data support the view that the BoJ will maintain accommodative policy settings, and we have revised higher our USD/JPY forecasts.”

“We have revised down our forecasts for the JPY. We now see USD/JPY at 145 on a 3-month view, recovering to USD/JPY140 and USD/JPY 135 in 9 and 12 months respectively on the back of expectations of softer Fed policy.”