Synopsis: 

HSBC highlights that USD/JPY is at a critical juncture at 150 following the BoJ's rate hike and JGB purchase cuts, with the FOMC meeting poised to influence further movement.

Key Points:

1. BoJ Policy Decisions:

   • Rate Hike: The Bank of Japan (BoJ) hiked rates to 0.25%.
   • JGB Purchase Cuts: The BoJ cut its plans to purchase Japanese Government Bonds (JGBs) by nearly JPY400bn per quarter.
   • Governor Ueda's Comments: Governor Ueda highlighted that a weak JPY remains a risk factor for rising inflation and provided hawkish forward guidance in the policy statement.
   • FX Section Addition: The BoJ acknowledged the effects of FX developments on prices, aligning more closely with the Ministry of Finance's (MoF) views on the yen.

2. Alignment with MoF:

   • Top Currency Official's Statement: Newly appointed top currency official Mr. Mimura mentioned that the disadvantages of a weak JPY are becoming more noticeable, suggesting that intervention is necessary to counter speculation.

3. FOMC Meeting Impact:

   • Next Key Event: The outcome of today's FOMC meeting will be crucial for the JPY.
   • Market Expectations: If markets do not see a clear indication of a September rate cut from the Fed, the JPY could lose some of its overnight gains.
   • Significance of 150 Level: A break below the 150 level could be significant for USD/JPY.

Conclusion:

USD/JPY is at a pivotal point following the BoJ's hawkish moves and ahead of the FOMC meeting. The alignment of BoJ and MoF views on the yen adds weight to potential intervention. The FOMC's signals regarding a September rate cut will be crucial, with a lack of clarity possibly leading to JPY weakening, while a break below 150 could mark a significant shift.