"In Japan, the BoJ will conduct a comprehensive assessment of policy on 21 September, but we see scant chance that it will cut its 2% price stability target or admit that its monetary policy is at its limits.

The markets broadly expect the following. (1) The BoJ will shift its price stability target date from its effectively abandoned two-year period to more flexible phrasing. (2) It will give itself greater latitude in its JGB purchasing operations to address doubts over sustainability, widening its annual target from ¥80trn, e.g. to ¥70-90trn. (3) It will reiterate that its monetary policy remains effective and does not face any near-term limits. A summary of the scenario for BoJ monetary policy is offered in

We believe that if multiple Fed rate hikes come to be seen as a certainty amid the strength of the US economy, the USD/JPY should regain some of its lost ground. The upside for the rate should grow further if the BoJ should carry out additional easing action. However, we see a 25% chance of such favorable conditions coming together and the USD/JPY settling at ¥100-110.

If uncertainties arise, including policy events in the US or Japan, the rate could see greater downside. A steep drop into the ¥90s could prompt stronger technical resistance at ¥100. We would rate this risk at 75%".

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