Japanese Yen: what’s next?

The Yen carry trade is being unwound sharply due to weak US data and a hawkish surprise from the BoJ, with the Yen's dislocation from its fundamentals remaining large. Weak global growth and the BoJ on diverging path from most Central Banks in the world are tailwinds for the JPY. A fast trade-weighted appreciation, though, would require 1) recession or 2) a persistent hike cycle from the BoJ. The repatriation of Japanese foreign assets is not a material risk for now, but its potential for a large market impact always warrants attention.