Ella 
The Australian dollar extended its losses against the US dollar following the release of key economic data on Monday. However, as market expectations for a dovish Fed continue to rise, heightened risk sentiment may limit the downside for the risky asset, the Australian dollar.
Australia’s construction authorizations surged 10.4% monthly in July, rebounding sharply from a 6.5% drop in June and recording the strongest growth since May 2023. The annual rate of building permits was 14.3%, a sharp recovery from the previous -3.7% rate. Additionally, China’s Caixin Manufacturing Purchasing Managers’ Index rose to 50.4 in August from 49.8 in July, which is particularly noteworthy given China’s close trade ties with Australia.
The dollar came under downward pressure after growing expectations for a 25 basis point rate cut by the Federal Reserve in September. However, the U.S. PCE price index for July released on Friday provided support for the dollar.
Traders are now likely to focus on upcoming U.S. employment data, including August’s non-farm payrolls (NFP), for further insight into the potential magnitude and pace of rate cuts from the Federal Reserve.
