The Q1 real GDP gain of 2.7% saar, compares with a 25-year average growth rate of 0.7% and the 2% (YoY) deflator compares to a 25-year average of -0.4%. That last number helps explain BoJ caution, of course – they’ve been trapped in disinflation for an awfully long time. Still, there’s got to be a chance that they are contemplating a further tweak to the yield curve control policy next week. 

10yr yield differential and USD/JPY re-set itself with the first YCC change at the end of last year. By the end of January USD/JPY was 10 figures lower than the yield differential implied, but that gap has halved in recent weeks. That increases the downside potential for USD/JPY (or EUR/JPY) if we do get a BoJ move.