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The Bank of Japan (BoJ) is due with a monetary policy statement and an updated outlook report, and analysts at Goldman Sachs have laid out the possible adjustments expected from Japan’s central bank.

Key highlights

BoJ could implement a higher yield target for 10-year GJBs, which would be the strongest JPY-bullish outcome.

Alternatively, the BoJ could broaden the targeted yield movement band, which would still be JPY-bullish, but less so.

Goldman Sachs analysts  peg the likely outcome as the BoJ instructing staff to begin to consider sustainability adjustments in September, which would also support the Yen and open up room to make policy adjustments later in 2018.

“Under this outcome, USD/JPY may decline somewhat further as investors build in expectations for a change in the autumn”.

Less JPY-supportive outcomes would be statements from the BoJ on making smaller adjustments, such as adjustments to ETF purchasing structures and dropping the 80 trillion Yen annual JGB purchase target.