• The Australian Dollar depreciates despite positive economic data on Monday.
• Australia’s Building Permits increased by 10.4% MoM in July, marking the strongest growth since May 2023.
• The US Dollar may depreciate due to the rising odds of a 25 basis point rate cut by the Fed.

The Australian Dollar (AUD) extends its losses against the US Dollar (USD) following the release of key economic data on Monday. However, improved risk sentiment could limit the downside of the risk-sensitive AUD, as dovish expectations surrounding the US Federal Reserve (Fed) continued to rise.

Australia’s Building Permits surged by 10.4% month-over-month in July, sharply rebounding from a 6.5% decline in June, marking the strongest growth since May 2023. On an annual basis, the growth rate reached 14.3%, a significant recovery from the previous 3.7% decline. Additionally, China’s Caixin Manufacturing PMI rose to 50.4 in August, up from 49.8 in July, which is particularly noteworthy given China’s close trade relationship with Australia.

The US Dollar receives downward pressure following the rising expectations of a 25 basis point rate cut by the Fed in September. However, the Greenback found support from the US July Personal Consumption Expenditures (PCE) Index data released on Friday.

Traders are now likely to focus on the upcoming US employment figures, including the Nonfarm Payrolls (NFP) for August, to gain further insights into the potential size and pace of Fed rate cuts.