AUD/JPY steadies around 96.50, focus shifts to potential US tariff updates on China

• AUD/JPY holds ground following the release of the monthly Consumer Price Index.
• Australia's monthly CPI rose by 2.5% YoY in January, compared to an anticipated 2.6% growth.
• The Japanese Yen may find support from rising bets of more BoJ's rate hikes.

AUD/JPY maintains its position after registering losses in the previous session, trading around 96.50 during the Asian hours on Wednesday. However, the upside of the currency cross could be restrained after Australia's monthly Consumer Price Index (CPI) showed a 2.5% year-over-year rise in January but fell short of market expectations for 2.6% growth.

Attention turns to potential updates from China's Ministry of Commerce on talks between China's Vice Commerce Minister and US business leaders regarding tariffs. A Bloomberg report on Tuesday revealed that the Trump administration plans to tighten chip export controls on China -- a key trading partner for Australia. The US is reportedly considering stricter restrictions on Nvidia chip exports and additional limitations on Chinese firms like SMIC and CXMT.

The Japanese Yen (JPY) may find support amid a global risk-off mood and growing expectations of further interest rate hikes by the Bank of Japan (BoJ). The BoJ is expected to raise rates from 0.50% to 0.75% this year. According to Bloomberg, overnight index swaps fully price in a rate hike by September, with a 50% chance of an earlier move as soon as June.

Meanwhile, traders in Japan are preparing for a series of key economic reports set to be released on Friday. These reports -- covering industrial production, retail sales, and Tokyo inflation -- could offer crucial insights into the BoJ's future monetary policy direction.