Slow growth in China, stagnation in Germany and softening growth in the US all pose as headwinds for the Japanese economic outlook and suggest that, like other central banks, the BoJ’s policy decisions next year will be data dependent. That said, with the odds currently favouring further policy normalisation next year and given rate cut risks for other G10 central banks, the JPY appears poised to have a better year in 2024. 

We have revised down our 12-month USD/JPY forecast to 135 from 140.