The market has a gun to the head of the Bank of Japan

Has a central bank ever been under so much pressure?

The thinking today is clear: Rumors/reports of government fiscal stimulus were slightly disappointing (but very muddy). So that means the government in Japan isn't going "all-in" and that means that the BOJ isn't going to go "all in" either.

What's even more telling is that rumours in the past week of the government unveiling a 20 trillion yen package (compared to 10 trillion) or even 30 trillion hardly gave USD/JPY any lift.

What's even tougher for the BOJ is that there isn't much they can do. There's more QE or slightly lower rates but the world of assets available to buy isn't great. The other option is pledging to keep its balance sheet a certain size for longer. That's possible but it may also fall flat because the market may have already priced in the idea that the BOJ has monetized.

Given the market action, maybe we're asking the wrong question. Instead of asking what the BOJ will do Friday, maybe we should be asking what they're do when USD/JPY falls below 100.