Credit Agricole CIB Research revises down its USD/JPY forecasts.

"Without Japan’s Government Pension Investment Fund (GPIF) changing its asset allocations towards domestic assets, USD/JPY could struggle to head significantly lower while oil prices remain elevated and the BoJ only matches Fed rate hikes.

While we cannot know the new asset reallocations of the GPIF, which could be revealed in early November, we judge the most likely new allocations towards domestic bonds of between 31-35% combined with no increase or a modest increase in domestic equity holdings to 31%. Such reallocations would generate repatriation flows of USD115- 138.1bn, resulting in short-term fair value for USD/JPY between 148-150," CACIB notes.

"We are lowering our USD/JPY forecast profile, now expecting the exchange rate to average 156 in Q426 (down from 163) and to continue its downward path to 150 in Q427 (previously 156)," CACIB adds.