AUD/JPY punches up to 83.50 on a bullish tone ahead of China trade balance figures

• The Aussie is bumping higher as risk sentiment appears in early Friday action.
• Middle East concerns are giving way to risk appetite in the Asia session, but trade concerns are looming.

The AUD/JPY turned bullish in the early Tokyo session, muscling into 83.50 after breaking loose from resistance late in the overnight market.

Markets are flipping into risk-on mode ahead of a hefty release schedule for the Asia session, which sees Chinese Trade Balance data dropping at 02:00 GMT, immediately following the Australian Financial Stability Report. The Reserve Bank of Australia (RBA) noted in the FSR that the overall banking system remains "resilient", but there are some downside risks posed by China trade and high household debt, but risks are abating under tighter loan standards.

Further reading: RBA FSR: Risks to Australia economy from China remain elevated

When are the China data releases and how could they affect the AUD/USD?

As noted by FXStreet's Omkar Godbole, "A better-than-expected trade surplus could put a bid under the Chinese Yuan and the Australian dollar (also considered as a proxy for China. That said, a sustained rally in AUD could be seen if China reports a solid rise in the imports of copper and iron ore (key Aussie exports). On the other hand, a worse-than-expected surplus, and more importantly a sharp drop in the imports of copper and iron ore could weigh over the Aussie dollar."

Aussie bulls will be hoping for a positive twist to the Trade Balance figures in order to keep the struggling AUD run alive a little while longer.

AUD/JPY Levels to watch

With the Aussie driving up against the Yen since reaching a bottom late-March at 80.50, AUD bulls will need to drive the pair up passed March's highs of 84.50 before going on to challenge the 200-day SMA currently near 86.30, while bears will need to push back into last week's highs around 82.60 before challenging March's lows at 82.50 to re-establish a bearish trend.