Yen Outperforms Major Currency Peers as BOJ Rate Hike Bets Grow

The yen outperforms all its major peers ahead of the Bank of Japan’s widely anticipated move to lift its benchmark interest rate this week, as traders await key US economic data.

Japan’s currency gained as much as 0.4% to 154.68 against the dollar, while dollar-yen’s 1-week implied volatility rose to its highest since November. The move comes after confidence among Japan’s large manufacturers rose to the strongest level in four years, market expectations the BOJ will interest rates to the most since 1995.

Traders are also bracing for US economic data that will help shape the Federal Reserve’s rate outlook. The November monthly jobs report due later today is expected to show a sluggish labor market.

Teppei Ino , head of global markets research at MUFG Bank Ltd. in Tokyo, said he plans to check the key labor market report at night. “If the figures come in weak, dollar selling could emerge, potentially pushing dollar-yen below 154,” he said.