AUD/JPY bulls attack 90.00 as BoJ Minutes defend easy-money policy, China data eyed

• AUD/JPY remains on the front foot after rising the most in a month.
• BoJ Minutes push back hopes of tighter monetary policy, yields struggle to extend the previous day’s run-up.
• China Retail Sales, Industrial Production eyed for fresh impulse.

AUD/JPY stays firmer for the second consecutive day, taking the bids to refresh intraday high near 89.95 during early Wednesday, as cautious optimism in the market joins the Bank of Japan’s (BoJ) slightly dovish Monetary Policy Meeting Minutes.

“It is important to continue with monetary easing,” said the Bank of Japan (BoJ) Minutes statement. The BoJ Minutes also stated that the members agreed Japan's inflation likely to slow toward latter half of next fiscal year.

Also read: BoJ Minutes: Members agreed japan's economy expected to recover

Elsewhere, receding fears of the global banking debacle and a return to the 2008 financial crisis due to the latest fallouts of the Silicon Valley Bank (SVB) and Signature Bank seem to favor the sentiment and underpin the AUD/JPY pair’s upside momentum. Recently, US Senate Banking Committee Chairman Sherrod Brown and Federal Reserve Governor Michelle Bowman ruled out chatters suggesting the grim conditions of the US banking industry. Previously, Japanese Finance Minister Shunichi Suzuki said on Tuesday that they are “closely watching how the Silicon Valley Bank (SVB) case may impact Japan's economy and financial conditions.” The policymaker also added that Japan's financial system remains stable as a whole.

Amid these plays, S&P 500 Future print mild gains while tracking the Wall Street benchmarks whereas the US Treasury bond yields struggle for clear directions after positing the biggest daily gains in five weeks the previous day.

Looking ahead, China’s February month data dump, including the Fixed Asset Investment, Industrial Production and Retail Sales could direct immediate AUD/JPY moves. That said, China’s Retail Sales is expected to improve to 3.5% versus -1.8% prior while the Industrial Production growth could also rise to 2.6% from 1.3% previous readings. However, the Fixed Asset Investment is likely to have eased to 4.4% YoY so far in 2023, till February, versus 5.1% prior.

Additionally, headlines conveying the market sentiment after the SVB fallout and the bond market moves will also be important for the AUD/JPY traders to watch for clear directions.

Technical analysis

AUD/JPY bulls need to cross a seven-week-old horizontal support-turned-resistance area, around 90.15-25, to confirm further upside momentum.