BoJ's expansion of QQE program likely in this week

The BoJ is likely a bigger focus this week as disappointing economic data and weak corporate inflation outlook led to market expectations for further easing at this week's meeting. Indeed, an expansion of QQE program via increased monetary based targets with larger JGB and ETF purchases are expected. A further ease on the 30th is likely, but it is a close call, 23 October 2015, says Barclays. 

However, ambiguity regarding BoJ's commitment to 2% inflation by H1 FY16, potential operational limitations of JGB purchases, and declining political appetite for yen weakness may discourage an aggressive action, leaving our call a close one. 

"A meaningful expansion of QQE at this week's BoJ meeting should put upward pressure on USDJPY and pose upside risk to our end-2015 USDJPY forecast of 123. Yet, already extended undervaluation of JPY will likely cap the scope for depreciation. Also, concerns on EM growth and weak sentiment also may weigh on the USDJPY, undermining durability of yen weakness", argues Barclays.