AUD/JPY jumps to near 94.50 as investors lack clarity on BoJ's monetary policy outlook

• AUD/JPY advances for the fourth trading day in a row, while the Japanese Yen underperforms its peers on Tuesday.
• BoJ Ueda is confident about further monetary tightening if the underlying inflation returns to their 2% target.
• Investors await the outcome of the US-China trade meeting in London.

The AUD/JPY pair climbs to near 94.50 during Asian trading hours, extending its winning streak for the are fourth trading day on Tuesday. The cross strengthens as the Japanese Yen (JPY) underperforms its peers, while investors turning cautious about whether the Bank of Japan (BoJ) will raise interest rates again this year.

On Monday, Japan's Prime Minister Shigeru Ishiba warned that rising interest rates by the BoJ could limit the government's borrowing power by increasing the cost of funds, an element that could hinder Tokyo's spending plans. The statement from PM Ishiba came at a time when Tokyo has cited concerns over the economic outlook due to the fallout of the tariff policy by United States (US) President Donald Trump.

However, BoJ Governor Kazuo Ueda has kept the door open for further monetary policy tightening. Earlier in the day, Kazuo Ueda told Parliament that "we will raise interest rates if we have enough confidence that underlying inflation nears 2% or moves around 2%." According to a report from Reuters, the BoJ has signaled that the underlying inflation, a specific gauge of price pressures based on demand, has remained short of its annual target, even as broader consumer inflation trended well above 2% for at least the past three years. 

Meanwhile, the Australian Dollar (AUD) outperforms its peers amid optimism that trade discussions between the US and China in London, which have entered their second day, will end on a positive note.

White House economic adviser Kevin Hassett expressed confidence in an interview with CNBC on Monday that "export controls to be eased and rare earths to be released in volume" after the meeting.

Given that Australia is the leading trading partner of China, an improvement in the Chinese economic outlook strengthens the Aussie Dollar.