Japan’s government appears to have changed course and dropped its attempt to weaken the yen in favour of mitigating the impact of a strong currency. For now we are sticking to our view that the yen will fall back as the Bank of Japan eases further and as Japan loses some of its safe haven appeal. But it would not now take much – perhaps the earlier adoption of QE3 by the Fed than we currently anticipate – to prompt us to switch to forecasting continued appreciation.