AUD/JPY rises above 94.00 as risk sentiment improves amid China's stimulus measures

• AUD/JPY advances after the release of key economic data from China on Monday. 
• China announced plans featuring measures to boost wages and stabilize stock and real estate markets. 
• The BoJ is expected to keep its current policy unchanged at its upcoming meeting on Wednesday.

AUD/JPY continues to gain ground for the second successive day, trading around 94.20 during the Asian hours on Monday. The currency cross appreciates as the Australian Dollar (AUD) gains ground against its peers following the release of China's economic data on Monday. Any developments surrounding the Chinese stimulus plan could boost the AUD, as China is a major trading partner to Australia.

China's retail sales grew by 4% year-over-year in January-February, improving from December's 3.7% increase. Meanwhile, industrial production rose 5.9% YoY during the same period, exceeding the 5.3% forecast but slightly lower than the previous reading of 6.2%.

The risk-sensitive AUD/JPY cross receives support as the Australian Dollar gains ground and the Japanese Yen (JPY) loses ground amid improving risk sentiment as China unveiled a special action plan over the weekend to revive consumption. The plan includes measures to increase wages, boost household spending, and stabilize stock and real estate markets.

However, the AUD/JPY cross may face upside limitations as the JPY could strengthen amid firm expectations that the Bank of Japan (BoJ) will continue raising interest rates this year. Still, the central bank is widely anticipated to maintain its current policy at its upcoming meeting on Wednesday.

Last week, major Japanese firms agreed to substantial wage increases for the third consecutive year, aiming to support workers against inflation and address labor shortages. Higher wages are expected to drive consumer spending, fuel inflation, and give the BoJ more flexibility for future rate hikes.