BoJ’s next steps remain central to bearish yen views

Japanese flow dynamics in the Abenomics era have been Japanese policy-dependent, which is why the BoJ's next steps remain central to bearish yen views when the Fed is hibernating. 

But there are constraints on the BoJ launching QQE3, both political and practical. The political constraint is ongoing negotiations around the Trans-Pacific Partnership (TPP), given US  congressional attempts to link fast track authority to measures countering currency manipulation. 

And while the G7 have indirectly approved currency weakness driven by domestic monetary policy - they collectively agree that purchasing domestic assets for domestic policy objectives like reflation is acceptable - the distinction between a central bank buying domestic assets (like JGBs though QE) and foreign ones (like the dollar though outright FX intervention) is often lost on the Hill. 

JP Morgan views that the Japanese government has prioritised passage of the TPP over an upsizing of QE, at least for the rest of 2015