Bank of America Global Research discusses the JPY outlook and sees a scope for JPY verbal intervention at next week BoJ policy meeting,
"The BoJ remains the only in G10 that committed to loose policies. We expect the BoJ to deliver a one-off rates adjustment in 2H CY22 (base case October), consisting of a hike to the short rate target (to 0.0-0.1%) and a shift in the YCC 10yr target permissible trading band to +0.0-0.5%. But we think it is too early for the BoJ to capitulate and see no change to YCC next week," BofA notes.
"In our view, they are right to remain dovish, as core inflation remains well below 2%, while headline inflation at 2.5% is the lowest in G10. Still, given how much JPY has weakened, some verbal intervention next week is likely. This may prevent further JPY weakness, but is not enough for a turn, in our view," BofA adds.