USDJPY pressed-up against key resistance with focus on US CPI

USDJPY is up on the day as the US dollar rallies to the start of the week following last Friday's dismal performance. Risk-off markets have kicked off a bout of demand for the greenback that is rising across the board. At the time of writing, USDJPY is higher by some 0.18% at 146.90 and between 146.75 and 147.17.

The major news causing volatility is from Beijing which has denied it was considering easing its zero COVID-19 policy, helping the greenback to recover some ground that was lost on Friday due to a conflicting report that they were. At the same time, the US data on Friday was mixed.  

US Nonfarm Payrolls increased 261,000 last month, data showed, also offering a revision show 315,000 jobs added instead of 263,000 as previously reported. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000. However, the Unemployment Rate rose to 3.7% from September's 3.5%. Average hourly earnings increased 0.4% after rising 0.3% in September, but the rise in wages slowed to 4.7% year-on-year in October after advancing 5.0% in September.

Eyes on midterms and CPI

For the week ahead, US inflation data and mid-term elections will be key. ''Core prices likely slowed modestly in Oct, but to a still strong 0.4% MoM pace. Shelter inflation likely remained the key wildcard, though we look for used vehicle prices to retreat sharply,'' analysts at TD Securities explained. 

As for the midterms, America goes to the polls on November 8th where control of both chambers of Congress and dozens of governorships are on the line. ''Polls suggest a Republican majority in the House and Senate, which is in line with historical relationships as well as the low approval ratings of President Biden due to the economy, inflation, and crime,'' the analysts at TD Securities said. 

USDJPY H1 chart

A break of the trendline resistance will be a bullish development for the week ahead although pressures below spot opens risk of a significant downside continuation.