AUD/JPY BULLS TAKE CHARGE AT THE START OF THE WEEK, 84.20 EYED

• AUD/JPY bulls step in at support following Friday’s rout in higher-yielding forex.
• Risk sentiment remains elevated but the bulls are taking charge regardless. 

AUD/JPY is adding gains on the first day o the week as the Aussie gains traction with traders picking up the pieces leftover from Friday’s rout in the higher-yielding currencies, such as the Aussie. AUD/JPY, at the time of writing, is trading at 84.05 and up some 0.18% after travelling from a low of 83.81 to a high of 84.13. 84.20 is a key resistance to break for the session ahead,

On Friday, USD/JPY spiked to 114.03 on the strong headline payrolls data but traders were quick to reverse their tact considering the harmony amongst central banks and a less hawkish stance. This led to a surge in fixed income and a drop in US treasury yields. Consequently, the higher yielders on forex bore the brunt of the sentiment which helped the yen climb to the top of the forex leaderboard. The risk-on sentiment weighed on on AUD/JPY also and we are now seeing some stability in today s markets from those moves.

KEY DATA IN FOCUS

Meanwhile, for the week ahead, US Consumer Price Index and Aussie jobs will be the focus as traders try to assess the economic landscape while central banks depend on it. ”The Reserve Bank of Australia is upbeat on the labour market and expects jobs to fully recover to pre-Delta levels (Aug) by year-end,” analysts at TD Securities said. ”There is still a shortfall of 284k jobs and jobs could return quickly given the easing in restrictions in NSW and VIC. The participation rate is expected to pick up to 65% in tandem with the reopening, bringing the u/e rate to 4.7% from 4.6%.”

As for CPI, the analysts at TDS explained that they are expecting inflation to slow significantly in 2022 as fiscal stimulus fades and supply constraints ease, but we don’t expect the data to be validated in the very near term. ”The CPI probably rose rapidly in October, reflecting a surge in energy prices and a resumption of the uptrend in used vehicle prices after two declines. The health insurance part likely picked up as well.”