The AUD/JPY currency pair remains largely unaffected, retaining most of its gains above the 94.00 level. Traders are advised to watch for important clarifications from the latest round of US-China trade talks. This pair has shown tremendous resilience in recent sessions, leading a two-day strong upside reversal and holding that on a two-day close above the 94.00 mark. Future market participants have an excited eye toward Washington. They expect the result of these trade negotiations to play a decisive role in determining the next moves of both the Australian Dollar (AUD) and Japanese Yen (JPY).
Flat economic conditions are becoming more apparent according to recent economic data. This was made possible by the very significantly upward revision in first quarter Gross Domestic Product (GDP) figures. Preliminary data showed a flat -0.2% decrease. This narrowing trend is an alarming indication of what’s in store for Australia’s export-reliant economy, especially given Australia’s heavy dependence on trade with Beijing. Japan’s economic prospects suddenly appear much brighter following an upward revision of its Q1 GDP data. This policy change has dramatically improved the Yen’s position in comparison to all other major currencies.
On the FX front, this week’s economic calendar in Australia is not awash with important data releases. Consequently, external forces are the new focus of investors with the most prominent being the US-China trade talks. The upcoming bilateral talks could prove central to shaping the future course of the AUD/JPY cross.
In spite of all these contradictory economic signals coming out of Australia, optimism about the state of US-China trade negotiations is soaring. In announcing the tariffs, President Donald Trump said he was confident that negotiations with Chinese leader Xi Jinping would bring about successful resolutions. His recent phone call with Xi, by all accounts, was a hopeful, if not optimistic, exchange. This is a promising sign that both parties are committed to engaging in a thoughtful discussion.
“I am pleased to announce that Secretary of the Treasury Bessent, Secretary of Commerce Lutnick, and United States Trade Representative, Ambassador Greer, will be meeting in London on Monday, June 9, 2025, with Representatives of China, with reference to the Trade Deal. The meeting should go very well,” – US President Donald Trump
Our next meeting in London will be even more crucial. It represents a significant turn in the miles-long-running back and forth negotiations between the two economic heavyweights. Strong trade relations between the US and China are essential not only for their economies but for global market stability. Therefore, any headline coming out from these negotiations could have direct impact on their currency valuations.
Right now, the next move for the AUD/JPY pair will likely be determined largely by what happens with these trade talks. US-China relations Traders are closely watching for rhetoric and changes in tone from U.S. and Chinese leaders. The nature of this bilateral relationship holds great importance in shaping world markets, particularly for developing economies. Our advice to investors is to brace for increased volatility.
Therefore, traders are watching China’s trade balance like a hawk. In May, it announced a hefty CNY743.56 billion as well as major geopolitical implications. This data point is a bellwether for the health of Chinese trade overall and can significantly impact market perceptions about the progress of ongoing trade negotiations.