AUD/JPY faces selling pressure below 95.00 amid cautious mood

• AUD/JPY loses momentum to around 94.95 in Wednesday’s early European session, down 0.35% on the day. 

• Japan reported its exports fell slightly more than expected in July

• The Chinese central bank left the Loan Prime Rates unchanged in August. 

The AUD/JPY cross attracts some sellers to near 94.95 during the early European session on Wednesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) amid the cautious mood in the markets. Investors will focus on Japan’s National Consumer Price Index (CPI) for July, which is due later on Friday. 

Investors remain cautious over ongoing Russia-Ukraine peace negotiations. US President Donald Trump said on Tuesday that arrangements were being made for a meeting between Russian President Vladimir Putin and Zelenskiy, which could lead to a trilateral summit involving all three leaders. Any signs of escalating tensions or lack of progress of the peace deal could underpin the safe-haven currency like the JPY. 

Japan reported its exports fell slightly more than expected in July, pressured by higher tariffs on goods shipped to the US. Data released by the Ministry of Finance showed Japan’s Exports fell  2.6% YoY in July, compared to a decline of 0.5% in June, worse than the estimates of 2.1%. This report fuels concerns over the Japanese economic outlook, which might cap the upside for the JPY and create a tailwind for the cross. 

The Australian Dollar struggles to gain ground after the People’s Bank of China (PBOC) decided to leave its one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.00% and 3.50%, respectively.

Analysts expect the Chinese government to roll out additional fiscal stimulus measures if the economy weakens later this year. Citi projects a 500 billion yuan quasi-fiscal injection to support demand. Any positive developments surrounding fresh Chinese stimulus plans could lift the China-proxy Aussie, as China is a major trading partner of Australia.