AUD/USD holds steady above 0.6500, lacks bullish conviction amid trade war fears

• AUD/USD attracts buyers for the third straight day amid a modest USD weakness. 
• Geopolitical risks and trade war concerns keep a lid on further gains for the Aussie.
• Bets for slower Fed rate cuts limit the USD losses and contribute to capping the pair.

The AUD/USD pair trims a part of intraday gains to a multi-day top and trades just above the 0.6500 psychological mark during the first half of the European session on Friday, up for the third consecutive day. 

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This is seen as a key factor lending support to the AUD/USD pair, though bulls seem reluctant amid worries that US President-elect Donald Trump's tariff plans could trigger a US-China trade war. 

Meanwhile, the US Personal Consumption Expenditure (PCE) Price Index released on Wednesday showed that the progress in lowering inflation stalled in October. This comes on top of the growing market conviction that Trump's expansionary policies will boost inflation, which should restrict the Fed from easing its policy further. This helps limit the USD losses and caps the AUD/USD pair. 

Apart from this, persistent geopolitical tensions stemming from the protracted Russia-Ukraine war warrant some caution before placing aggressive bullish bets around the risk-sensitive Aussie. In the absence of any relevant market-moving economic data from the US on Friday, the AUD/USD pair remains at the mercy of the USD price dynamics and seems poised to end the week on a flattish note. 

That said, the official Chinese PMIs, due for release over the weekend, will play a key role in influencing sentiment surrounding the China-proxy Australian Dollar (AUD). The focus will then shift to important US macro data scheduled at the beginning of a new month, including the closely watched Nonfarm Payrolls (NFP) report, and the third quarter Australian GDP growth figures next week.