Checking up on Japan's inflation and labour markets

Broad USD trend and fluctuations in risk sentiments will likely remain the main driver of USDJPY with Japanese data coming into focus in the latter part of this week. In particular, October Nationwide CPI (Friday) will be closely scrutinized. While consensus expect core CPI to remain slightly negative (-0.1% y/y) for the third consecutive month, the BoJ remains confident on the upward trend of ex-energy core CPI (which accelerated to +1.2% y/y in September). 

Furthermore, Governor Kuroda pointed out that the share of CPI items with positive y/y inflation are increasing , as another sign of positive dynamics. Tightening labour markets (and wage growth) is another critical aspect of "balanced" inflation that BoJ seeks. In this light, October labour market survey (Friday) will shed some light on the latest developments. 

Continued tightness is expected in the labour markets with unemployment steady at 3.4% and job offers/applicants ratio edging up slightly. Elsewhere, we will get October household survey (Friday) that is important to track the Q4 consumption momentum.