AUD/JPY holds above 95.00 on the improved Chinese outlook

• AUD/JPY holds positive ground around 95.15 during the early European session on Friday.
• Chinese leaders agreed to set China’s 2024 growth target at around 5.0% and target a budget deficit of 3% of GDP in 2024.
• The report that the Bank of Japan (BoJ) might exit its negative rate policy sooner than expected lends support to the JPY.
• Market participants will closely watch the BoJ monetary policy meeting next week.

The AUD/JPY cross snaps the three-day losing streak during the early European session on Friday. The cross remains capped under the 100-day Exponential Moving Average (EMA) at 95.50 on the daily chart. The uptick in the cross is bolstered by the improved Chinese data, which lifts the China-proxy Australian Dollar against the Japanese Yen (JPY). The cross currently trades near 95.15, gaining 0.13% on the day.

According to various media reports, Chinese leaders agreed at the Central Economic Work Conference this week to set China’s 2024 growth target at around 5.0%. Furthermore, Chinese authorities will target a budget deficit of 3% of GDP in 2024, compared to this year’s revised ratio of 3.8%.

Apart from this, 650 billion Yuan in MLF loans are expected to mature, and the central bank injects 1.45 trillion Yuan to boost bank liquidity. That being said, the PBoC’s activities support the nation’s financial system and sentiment. The positive development surrounding the Chinese economic condition also lifts the AUD, as Australia is one of China’s major trade partners.

On the JPY’s front, the report that the Bank of Japan (BoJ) might exit its negative rate policy sooner than expected acts as a tailwind for the Japanese Yen (JPY) and might cap the AUD/JPY’s upside. On Friday, Japanese Finance Minister Shunich Suzuki came out with some verbal intervention. Suzuki said that Japanese authorities will closely watch the market moves, and it’s desirable for currencies to move stably, reflecting fundamentals.

Next week, traders will monitor Australia’s Mid-Year Economic and Fiscal Outlook on Monday. The attention will shift to the Bank of Japan monetary policy meeting on Tuesday. This event could trigger volatility in the market and give a clear direction to the AUD/JPY cross.