Many economists including those at UBS Group AG and Mitsubishi UFJ Research and Consulting Co. retain the view that economic fundamentals remain the most likely trigger for the BOJ. Some also note, as the central bank itself has, that inflation will emerge as labor shortages propel wages higher.

Until 2012, the yen was trading at about 80 to the dollar, weighing on profits for such companies as Toyota Motor Corp. and Honda Motor Co.

Kuroda can’t afford to have Japan’s large companies cut their earnings forecasts as he has cited high business profits as a source of more investment and wage increases, said JPMorgan’s Kanno.
Large manufacturers expected the yen to be 117.39 on average for the year through March, taking it close to potential trigger levels suggested by some economists. The median of market forecasts compiled by Bloomberg is for the yen to be at 122 at the end of this quarter.

Economists were almost evenly split on the likelihood of more stimulus before the Oct. 30 meeting at which Kuroda and his policy board stood pat. When the BOJ last increased its asset purchase program in October 2014, only three of 32 analysts surveyed by Bloomberg forecast the move.

Eoin Treacy's view

The Yen has been one of the primary tools used by the Bank of Japan to enact is reflationary program. Everyone got the message back in 2012 when the stock market took off in an inverse response to the Yen’s decline. 

The US Dollar lost momentum against the Yen from early this year and failed to hold the move to ¥125 in June. It had been confined to a tight range, around the ¥120 level, from August and that area also represents the region of the 200-day MA. During the September/October sell-off in global stock markets there was some safe haven buying of the Yen which acted as a headwind for the stock market but recent Dollar strength has acted as a tailwind and reaffirms the inverse correlation between the Yen and domestic stock market. 

The Topix 2nd Section Index of small caps, which so often leads the wider market, broke back above the 200-day MA this week and continues to hold a short-term progression of higher reaction lows. 

The Topix Banks Index found support from August in the region of the upper side of the 2013 through 2014 range and a sustained move below 220 would be required to question potential for additional upside. 

The Nikkei-225 has outperformed somewhat and is closing in on the psychological 20,000 level. It is somewhat overbought in the short term so there is scope for some consolidation but a sustained move below 18,500 would be needed to question recovery potential.