AUD/JPY sits near weekly top, bulls await sustained move beyond 96.00 mark

• AUD/JPY enters a bullish consolidation phase near the weekly high touched this Friday.
• A combination of factors undermines the safe-haven JPY and lends support to the cross.
• The divergent RBA-BoJ policy expectations keep a lid on any further gains for spot prices.

The AUD/JPY cross reverses an Asian session dip to the 95.65 area and climbs back closer to the weekly high touched earlier this Friday. Spot prices, however, lack follow-through, with bulls awaiting a sustained strength and acceptance above the 95.00 mark before positioning for any further gains.

The Japanese Yen (JPY) attracts some sellers after the Summary of Opinions from the Bank of Japan's (BoJ) July meeting showed that policymakers remain worried about the negative impact of higher US tariffs on the domestic economy. Apart from this, the upbeat market contributes to the safe-haven JPY's relative underperformance against the risk-sensitive Australian Dollar (AUD) and acts as a tailwind for the AUD/JPY cross.

The Aussie bulls, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of the key central bank event next week. The Reserve Bank of Australia (RBA) is scheduled to announce its policy decision next Tuesday and is widely expected to lower borrowing costs. This marks a significant divergence in comparison to hawkish BoJ expectations and might cap meaningful gains for the AUD/JPY cross.

In fact, the BoJ revised its inflation forecast at the end of the July meeting last week, and reiterated that it will raise interest rates further if growth and inflation continue to advance in line with its estimates. This keeps the door open for an imminent rate hike by the end of this year, which should help limit deeper JPY losses and warrants some caution before positioning for any further near-term appreciating move for the AUD/JPY cross.