Credit Agricole CIB Research discusses its expectations for tomorrow's BoJ policy decision.

"Friday will be BoJ Governor Haruhiko Kuroda’s last monetary policy meeting before his retirement. It will also be the last meetings for his Deputy Governors Masayoshi Amamiya and Masazumi Wakatabe. The BoJ is widely expected to leave its YCC intact tomorrow and in doing so leave the incoming Governor and Deputy Governors room to move," CACIB notes. 

"So, the altering YCC by Kuroda on Friday would be a big surprise and give the JPY a significant boost for several reasons: (1) sticker shock; (2) it would generate even more anticipation of further changes to YCC under the Governorship of Ueda; and (3) the market is positioned long USD/JPY after hawkish rhetoric from FOMC Chair Jerome Powell this week. Our FAST FX model for USD/JPY also shows that even a modest further widening of the 10Y JGB target band would weigh significantly on the exchange rate," CACIB adds.