📝BoJ YCC Change to Pose Limited Impact On USD/JPY: UBS

The feeling in trading ahead of BoJ's policy meeting on Oct. 31 is that a YCC change or even abandonment is probably only worth around 2 or 3 figures at most, and then the market would whip back to Y150 again. The overall rate differential and strength of the US is just too great to allow For a structural shift. Yen is in the same boat as every other currency - the dollar is strong because the us is strong. Structural change doesn't come until the US weakens. But a USDJPY that whips 3 whole figures in short order is one the BoJ can classify as disorderly - which is exactly the justification it needs to intervene. So, next Tuesday could be the double. YCC goes/changed and the BoJ step in to try and get the pair at least down to the mid 40's.

- UBS Strategy