The Japanese Yen (JPY) is flat against the US Dollar (USD) and but losing ground against all of the G10 currencies in an environment of broad-based USD weakness as we head into Friday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Markets hear talk of BoJ forecast upgrade

"Domestic risk is elevated into the weekend’s upper house elections, as market participants consider the fiscal implications of the outcome and the potential for sovereign credit downgrades in the event of slippage."

"In terms of fundamentals, media are reporting that the BoJ’s upcoming quarterly outlook will offer a less worrisome assessment of trade, growth, and inflation. The BoJ has been forced to pause its right hikes as a result of bond market volatility and trade policy uncertainty with the latter complicating negotiations heading into the weekend’s election."

"Absent a massive upset for PM Ishiba’s LDP, we see the near-term balance of risk as favoring near-term strength in JPY. For USD/JPY, we look to a return back toward the midpoint of its 142-148.50 range, targeting the 50 day MA at 145.20."