AUD/JPY rebounds firmly above 94.50 as focus shifts to China’s Trade Balance data

• AUD/JPY has picked bids around 94.20 as risky assets have defended the morning’s gap-down start.
• Weak Australian GDP projections and Retail Sales failed to bring volatility to Aussie.
• China’s Trade Balance data is seen higher at $95.95B vs. the former release of $84.74B.

The AUD/JPY pair has defended early Tokyo’s weakness in the risk appetite theme and is marching higher to recapture the critical hurdle of 95.00. The risk barometer fell into the grip of bears as risk-sensitive currencies witnessed a gap-down opening on Monday. The upside bias is favored as the market tone is extremely bullish as the Federal Reserve (Fed) is expected to trim the extent of rate hikes in its further monetary policy meetings.

On Friday, weak projections for Australian economic prospects dictated in the Reserve Bank of Australia (RBA)’s monetary policy statement failed to impact the Aussie bulls.

As per the monetary statement minutes, the Gross Domestic Product (GDP) projections for the first half of CY2023 have landed at 2.0% and 1.4% for the second half. Also, short-term inflation expectations have increased to 8.0% amid significant price growth in the service sector.

Also, weaker Retail Sales data didn’t dampen the Aussie investors’ mood. The Retail Sales for the third quarter slipped 0.2% vs. expectations of 0.4% despite mounting inflationary pressures in the Australian economy.

Going forward, investors will keep an eye on China’s Trade Balance data. The Trade Balance is seen higher at $95.95B vs. the former release of $84.74B. It is worth noting that Australia is a leading trading partner of China and China’s Trade Balance data will have a significant impact on Aussie.

On the Tokyo front, more developments on the Bank of Japan (BOJ)’s intervention will provide clarity to the market participants. The USDJPY pair is facing extreme selling pressure continuously around the 148.00 region, which might be an area of intervention activity by Japan’s policymakers. Contrary to that, Japanese Finance Minister Shunichi Suzuki said on Friday, they have “no intention of guiding fx to certain levels by intervening.”