AUD/JPY flat lines around 99.00; seems vulnerable amid China's economic woes

• AUD/JPY is seen consolidating the previous day’s heavy losses to a two-week low.
• Spot prices react little to unimpressive Chinese trade data amid trade uncertainties.
• Bets for an imminent BoJ interest rate hike underpin the JPY and favor bearish traders.

The AUD/JPY cross oscillates in a narrow trading range, around the 99.00 mark during the Asian session on Friday, and remains within striking distance of a two-week low, retested the previous day. Meanwhile, the fundamental backdrop seems tilted in favor of bearish traders and backs the case for an extension of the recent pullback from the 101.20 area, or the year-to-date high, touched in October.

Data released earlier today pointed to signs of cooling private consumption in Japan, which, along with Japan's new Prime Minister Sanae Takaichi's pro-stimulus stance, could allow the Bank of Japan (BoJ) to resist policy tightening. This holds back traders from placing fresh bullish bets around the Japanese Yen (JPY) and acts as a tailwind for the AUD/JPY cross. However, minutes of the BoJ's September policy meeting, released on Wednesday, kept hopes alive for an imminent rate hike.

Apart from this, a generally weaker tone around the equity markets offers some support to the safe-haven JPY and undermines the risk-sensitive Aussie. Meanwhile, the disappointing release of Trade Balance data from China suggested weak domestic demand in the world's second-largest economy amid trade-related uncertainties. Moreover, the lack of any major hawkish surprise from the Reserve Bank of Australia (RBA) weighs on the China-proxy Australian Dollar (AUD).

The aforementioned factors validate the near-term negative outlook and suggest that the path of least resistance for the AUD/JPY cross remains to the downside. Some follow-through selling below the 98.80 region, or the weekly through, will reaffirm the negative bias and pave the way for a fall towards testing sub-98.00 levels.