In the absence of policy shifts by the BoJ, we expect USD/JPY to trade slightly north of 150. We think 10Y JGB yields will edge up towards the BoJ’s upper ceiling in a stepwise manner to take some of the pressure off the JPY. We would watch the December policy review for a potential encore of the end-2022 policy pivot by then. 

Conversely, indications of policy tightening at the 31 October meeting – be it jettisoning the negative interest rate policy or YCC – could allow USD/JPY to trade closer to 145 though further upside may be limited by Japan’s stillwide rate differentials with the US.