Has the yen finally turned?

Now that the markets know the US Fed’s plans for additional QE, and these are presumably largely priced into the currency markets, any additional easing from the Bank of Japan will have a greater chance of weakening the yen. For this and other reasons, including the prospect that Japan's dire fiscal position finally undermines the currency, we continue to expect the yen to fall back to 85 against the dollar in the coming months and 90 in the second half of next year. This in turn should help to reverse some of the recent under-performance of Japanese equities.