HSBC - "The recent rally in USD-JPY has once again come off the back of investors believing “this time is different”. The expectation is the Japanese authorities may actively try to weaken the JPY. We believe that the recent expansion of the BoJ QE programme may actually be JPY positive. More direct and unilateral FX intervention would probably be ineffective in preventing USD-JPY strength in the long term – as it has been over the last 20 years. It also appears very unlikely that the BoJ would embark on supporting a USD-JPY floor as the political ramifications could be potentially damaging. The bias and prejudice towards the JPY has caused investors to once again buy USD-JPY. While this may have worked temporarily, the market will soon realise that even the BoJ is incapable of preventing the JPY from strengthening – in the ugly contest that is currently being played out in the FX markets. USD-JPY has been climbing up the stairs but it will soon fall down the lift shaft – ever was it thus."