Our sense is that BoJ’s confidence in relation to wage increases is strengthening and if they are being swayed by their own incoming information they may well decide in March to hike. The level of the Yen could play a role here too. Conditions are ripe for carry and if global risk conditions and low volatility continue, there’s a high chance of further moves higher in USD/JPY. But certainly, confidence in wage growth is rising and that means the fundamental reasoning for a hike is looking more compelling.

A March rate hike is looking more likely and the risk looks under-priced. 

While USD aspects are key for USD/JPY, a rate hike would certainly fuel some JPY buying.