Market bets on Bank of Japan raising interest rates soon, yen leading major currencies.

Ahead of the highly anticipated interest rate hike by the Bank of Japan this week, the yen strengthened against all major currencies, with traders waiting for key US economic data. The yen rose against the US dollar by 0.4% to 154.68 yen per dollar, while the one-month implied volatility for the USD/JPY pair reached its highest level since November last year. This volatility stemmed from Japan's large manufacturing industry confidence index reaching its strongest level in four years, further reinforcing market expectations of the Bank of Japan raising interest rates to their highest level since 1995. At the same time, traders are preparing for upcoming US economic data that could impact the outlook for Federal Reserve interest rates. The November US nonfarm payrolls report, scheduled to be released later today, is expected to show weakness in the labor market. The employment report will be released at 21:30 Beijing time on Tuesday. According to a median forecast from a survey of economists, nonfarm payrolls in November are expected to increase by 50,000; the unemployment rate may reach 4.5%, continuing its upward trend for several months and reaching its highest level since 2021. This report not only allows people to assess the long-awaited true state of the US labor market but also sets the tone for interest rate paths next year. However, this may not be a "routine" employment report, as the uncertainty and unusual factors in the data are more significant than usual due to the government shutdown. Teppei Ino, head of global market research at Mitsubishi UFJ Bank, stated that he plans to pay close attention to this crucial labor market report overnight. "If the data shows weakness, the dollar may face selling pressure, and the USD/JPY exchange rate may fall below the 154 level."