Japan’s unemployment rate in October was 2.6%, slightly higher than the predicted 2.5%. This information is key to understanding Japan’s economy as it faces both local and global challenges. **Economic Implications** The increase in unemployment might influence the Bank of Japan’s plans, especially regarding interest rates and efforts to boost jobs and economic growth. Keeping an eye on these changes is vital as Japan works to stabilize its labor market in uncertain global conditions. In other financial news, various currency rates and market shifts highlight the complex nature of the global economy. These factors affect policies and strategies, with more insights available from expert-driven financial newsletters and platforms. FXStreet provides in-depth information but stresses that the content is for informational use only. It recommends doing thorough research before making investment choices due to market risks. The views expressed reflect the authors’ opinions and not necessarily those of FXStreet, which does not offer personalized investment advice. **Market Strategy** With Japan’s unemployment rising to 2.6% in October, this reinforces the Bank of Japan’s cautious approach. This minor economic slowdown gives the central bank a reason to postpone any interest rate increases until at least 2026. For those trading derivatives, this indicates that the main reason for Yen weakness—the significant interest rate gap with other major economies—will continue. We expect the Japanese Yen to weaken further against the US Dollar. With the Fed Funds Rate stable at around 4.75% while Japan’s rate is close to zero, the carry trade remains very appealing. We suggest buying USD/JPY call options with strike prices in the 158-160 range, anticipating an increase in early 2026. However, we should be alert for possible currency interventions by the Ministry of Finance, especially with USD/JPY near the 155 level. Past interventions in 2022 and 2024 show that a sudden reversal is possible. Therefore, long call spreads could be a wise choice to limit potential losses if the government takes strong action. This economic situation continues to benefit Japanese stocks. A weak yen boosts the overseas profits of Japan’s big exporters, helping the Nikkei 225 index gain over 18% so far in 2025. We see further potential and recommend buying Nikkei 225 futures or call options before the year’s end. Key statistics support this cautious outlook, making any sudden aggressive move by the Bank of Japan unlikely and potentially disruptive to the market. Japan’s core inflation, which was 2.2% last month, is declining, and wage growth hasn’t been strong enough to indicate a lasting inflationary rise. This gives the Bank of Japan sufficient reason to maintain its supportive policy for the foreseeable future. Create your live VT Markets account and start trading now.

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