AUD/USD trades with modest gains above multi-month low, focus remains on US PCE data

• AUD/USD attract some buyers and snaps a nine-day losing streak to its lowest level since early May.
• A modest recovery in the equity markets undermines the USD and lends some support to spot prices.
• China’s economic woes might cap gains as traders now await the release of the US PCE Price Index.

The AUD/USD pair ticks higher during the Asian session on Friday and moves further away from its lowest level since early May, around the 0.6515 region touched the previous day. Spot prices currently trade just below mid-0.6500s and for now, seem to have snapped a nine-day losing streak amid subdued US Dollar (USD) price action.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, remains confined in a familiar range held over the past week or so as traders seek more clarity about the Federal Reserve's (Fed) rate-cut path before placing directional bets. Hence, the focus will remain glued to the release of the US Personal Consumption Expenditures (PCE) Price Index, due later today, which could influence the Fed's future policy decisions and drive the USD demand. 

Meanwhile, the markets reacted little to Thursday's upbeat US macro data, showing that the world's largest economy expanded by a 2.8% annualized rate during the April-June period as compared to the 2% rise anticipated. Additional details of the report revealed that the core PCE Price Index – the Fed's preferred inflation gauge – decelerated from 3.7% to 2.9% during the reported period. Furthermore, the US Initial Jobless Claims dropped to 235K last week vs. 238K expected. 

The data suggested that the US economy still holding up well, which, in turn, should act as a tailwind for the Greenback. Apart from this, persistent worries about a slowdown in China – the world's second-largest economy – might hold back traders from placing aggressive bullish bets around the China-proxy Australian Dollar (AUD). This makes it prudent to wait for strong follow-through selling before confirming that the AUD/USD pair has bottomed out in the near term.