AUD/JPY rises to near 98.80 after positive China PMI numbers

• AUD/JPY gains ground following encouraging Chinese PMI data.
• The Japanese Yen suffers after the expansion of Chinese manufacturing activity.
• Minutes from the RBA meeting will be published on Tuesday, providing insight into the central bank's future monetary policy stance.

AUD/JPY appreciates to near 98.80 during the European session on Monday, potentially supported by positive Chinese Purchasing Managers' Index (PMI) numbers. The close trade relationship between China and Australia likely contributes to this correlation.

Elsewhere, the safe-haven Japanese Yen (JPY) may have run into negative sentiment as investor confidence was buoyed by the first expansion in Chinese manufacturing activity in six months seen in March.

China's Caixin Manufacturing PMI came in at 51.1 on Monday, beating expectations of 51.0 and up from the previous reading of 50.9. Earlier on Sunday, China's National Bureau of Statistics released data showing the manufacturing PMI rose to 50.8 in March from 49.1 the previous month. Additionally, the non-manufacturing PMI rose to 53.0 in March from 51.4 in February.

Former BoJ official Tsutomu Watanabe has indicated that Japan's next rate hike may not materialize until October at the earliest. According to an assessment published by Bloomberg (gated), Watanabe expects the BoJ to take a cautious, data-driven approach, mainly due to concerns about the depreciation of the Yen.

However, the Australian Dollar (AUD) may have suffered due to weaker consumer inflation expectations, which could suggest expectations of interest rate cuts by the Reserve Bank of Australia (RBA) later 2024. Investors are expected to closely monitor the release of the RBA meeting minutes, scheduled for Tuesday, for the central bank's stance and future policy direction.