The next BoJ monetary policy meeting is scheduled for 28-29 January. Since the last meeting, the risk scenarios the BoJ previously warned about have already started to materialize, before the upcoming meeting.

"We expect the BoJ to stay on hold while keeping a close eye on the market and moves by governments such as China, we maintain our view that the BoJ is likely to ease further during 1H16, most likely in March or April", says BofA Merrill Lynch.

With some expectations for easing at this week's meeting, there is a risk share prices and USD/JPY will decline if monetary policy is kept on hold. Yields should remain low although concern is mounting that the decline in market liquidity might lead to sudden rise in volatility.

 External conditions and diminishing return of QQE suggest any bounce in USD/JPY on the back of surprise easing is unlikely to be sustained beyond the short term.