While the exact timing of the first rate hike remains uncertain, the direction of travel is clear. We continue to expect the BoJ to exit negative rate policy in the 1H of next year helping to reinforce the Yen’s rebound from deeply undervalued levels.

So far the recent rebound for the Yen has been mainly driven by expectations that major central banks outside of Japan including the Fed will begin to cuts rates earlier and deeper next year helping to narrow policy divergences with the BoJ.