We expect the BoJ to end YCC and NIRP at the January meeting. This is partially priced but the tone of the BoJ is likely to fuel expectations of further policy tightening later in 2024.

We believe the JPY has the greatest scope to outperform within G10 next year. The global inflation shock is reversing and that has the greatest implications for JPY with even a partial reversal of the move in USD/JPY from 115.00 to 150.00 implying considerable scope to outperform. 

After such a big move higher and given the attractive carry, short JPY positioning remains substantial but once expectations of a turn in the trend build further there is a risk of a more abrupt and even larger move stronger for the Yen than we currently forecast.