Ella 
AUD/JPY crossed around 94.00 during the Asian session on Tuesday, attracting some bargain hunting and turning higher for the third day in a row. AUD/JPY is currently trading around two-week highs around 94.25-94.30 and is now poised for further gains based on the recent rebound off the 100-day simple moving average (SMA).
The Australian dollar (AUD) continued to find support from the latest optimism over new measures introduced by China over the weekend, which boosted investor sentiment. Notably, China’s Ministry of Finance has taken steps to lure investors back to its battered stock market, announcing last Sunday that it will cut the stamp duty on shares from 0.1% to 0.05% effective Aug. Printing has been lowered for the first time since. This still supports the generally positive risk tone, which in turn is seen as a “tailwind” for the AUD/JPY cross.
Apart from this, a more dovish stance from the Bank of Japan (BoJ) also played a role in the yen’s underperformance and provided some support for AUD/JPY. In fact, the Bank of Japan is the only central bank in the world to maintain negative interest rates and is expected to stick to its ultra-loose monetary policy regime. Bank of Japan Governor Kazuo Ueda reaffirmed that speculation in a speech at a Jackson Hole symposium on Sunday, saying Japan’s underlying inflation rate remained slightly below its 2% target, ensuring the central bank could maintain inflation through next summer. The policy remains unchanged.
However, speculation that Japanese authorities will intervene in foreign exchange markets to support the currency still deters traders from placing aggressive bullish bets on the AUD/JPY cross. In addition, concerns about deteriorating economic conditions in China also prevented AUD/JPY from launching a significant rise. At the same time, the Reserve Bank of Australia (RBA) is expected to make another interest rate decision on hold in September, so investors must remain cautious before setting up positions for a significant rise in AUD/JPY.
