AUD/JPY attracts some sellers to near 94.50 as Japan's business mood improves 

• AUD/JPY softens to near 94.50 in Tuesday’s only Asian session. 

• Japan's Tankan Large Manufacturing Index rose to 13.0 in Q2, better than estimated. 

• Chinese June Caixin Manufacturing PMI data will be in the spotlight later on Tuesday. 

The AUD/JPY cross attracts some sellers to around 94.50 during the early Asian session on Tuesday. The Japanese Yen (JPY) edges higher against the Aussie after the upbeat Japanese Tankan survey. Traders brace for Australia’s Retail Sales data for May, which will be released later on Wednesday. 

Business sentiment among Japan's big manufacturers unexpectedly improved in the second quarter (Q2) of 2025. The encouraging report provides some support to the JPY and acts as a headwind for the cross. The Tankan Large Manufacturing Index rose to 13.0 in Q2 from 12.0 in Q1. This reading came in above the market consensus of 10.0. Meanwhile, the large Manufacturing Outlook arrived at 12.0 in Q2 versus 12.0 prior, stronger than the 9.0 expected. 

Many analysts expect the impact of US tariffs on exports and output to intensify later this year and complicate the BoJ's decision on when to resume interest rate hikes. This, in turn, might cap the upside for the JPY. A slight majority of economists in a Reuters poll anticipate the Japanese central bank's next 25 basis points (bps) hike to come in early 2026.

Traders await the Chinese Caixin Manufacturing PMI data for June for fresh impetus. If the data shows a stronger-than-expected outcome, this could lift the China-proxy Aussie as China is a major trading partner for Australia.