The AUD/JPY is currently around 99.35 in early Friday trading in Europe. Positive news regarding US-China trade talks is helping the Australian Dollar gain strength against the Yen. The reduction in trade tensions between the US and China is favorable for the Aussie. High-level discussions are set to take place in Malaysia, where US and Chinese officials will cover various topics, including trade and nuclear weapons limits.

Potential Impact Of Presidential Meeting

A possible meeting between the US and Chinese presidents at the Asia-Pacific Economic Cooperation summit could further affect the Aussie. China’s important trade relationship with Australia plays a significant role in this situation. Despite an increase in Japanese core inflation in September, the Japanese Yen is losing ground against the AUD. Analysts expect the Bank of Japan to keep interest rates steady in their upcoming meeting. Expectations for a rate hike have shifted to December, with most anticipating it will happen later. This outlook could limit the Yen’s ability to strengthen, although its appeal as a safe-haven currency may increase during uncertain times. Several factors influence the Japanese Yen, including the Bank of Japan’s policies and the difference in bond yields between Japan and the US. The Yen, known as a safe-haven currency, attracts investment during market turmoil due to its stability.

Strategies For A Rising AUD/JPY

Optimism about the US-China trade talks is supporting the Australian Dollar, keeping the AUD/JPY above 99.50. We expect this trend to continue with negotiations starting today in Malaysia, ahead of the presidential meeting next Thursday. This positive environment favors the Aussie, given its link to the Chinese economy. Recent information from the Australian Bureau of Statistics shows that exports to China increased by 3.2% in the third quarter of 2025, mainly due to strong iron ore demand. This connection underscores the Aussie’s sensitivity to positive news from the trade negotiations. A successful outcome could lead to a significant rise in the currency pair. Conversely, the Japanese Yen is likely to stay weak. Japan’s Core CPI for September, released last week, was 1.9%, still under the Bank of Japan’s 2% target. Therefore, it is likely that the BoJ will keep interest rates unchanged in their meeting next week, limiting the Yen’s potential for strength. Given this situation, we suggest strategies that benefit from a rising AUD/JPY. Buying near-term call options with a strike price of about 99.75, due after next week’s summit, could capture potential gains from a trade deal. This method allows us to take advantage of a positive outcome while minimizing our initial risk. However, there is a real risk that the talks could fall through, which would likely lead to a flight to safety and strengthen the Yen. Therefore, we should consider a small investment in out-of-the-money put options as a hedge against a sudden downturn. This protective measure safeguards our portfolio if the summit disappoints investors. Create your live VT Markets account and start trading now.

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