Insights 
VT 
The Australian dollar is trading around the session lows at approximately 0.6540. Meanwhile, building permits in July experienced a drop of 8.2% month-on-month, as compared to the anticipated 4.8% decline and a previous significant rise of 11.9%.
China Economic Data
For China, the S&P Global Manufacturing PMI for August reached 50.5, exceeding the expected 49.5 and previous also at 49.5. The People’s Bank of China set the USD/CNY reference rate at 7.1072, compared to an estimate of 7.1281.
The Australian private inflation survey indicated a month-on-month drop of 0.3% and a year-on-year rate of 2.8%. Caution is advised with foreign exchange trading, as it carries high risks including potential loss of initial investment.
The mix of Australian data presents a conflicting picture for the Australian dollar. We are seeing weak domestic activity, with business inventories and building permits falling short of expectations. This suggests the Reserve Bank of Australia may need to consider easing policy, especially after holding the cash rate steady at 4.85% for the last three meetings.
Traders should consider the downside risks for the Aussie, which is already testing lows around 0.6540. The private inflation survey showing a year-over-year drop to 2.8%, the lowest level since early 2024, reinforces the case for a more dovish RBA. Given this, buying put options on the AUD/USD could be a prudent strategy to hedge against a potential break lower in the coming weeks.
Global Economic Outlook
However, the surprisingly strong Chinese manufacturing PMI at 50.5 provides a significant counterbalance. This is the fastest growth we have seen in five months and supports demand for Australian commodities like iron ore, which has recently stabilized above $115 per tonne. This Chinese strength could place a floor under the AUD, creating a tight trading range until a new catalyst emerges.
The global environment remains tense, with Asian markets dipping on renewed US tariff uncertainty. The main event everyone is waiting for is the upcoming US jobs data, which will be critical for the Federal Reserve’s next move. After July’s non-farm payrolls report showed a moderation to 180,000 new jobs, another soft number could cement expectations for a fourth-quarter rate cut.
This uncertainty and broader security risks, highlighted by the recent Salesforce breach, are pushing some capital towards safe havens. Gold has firmed as the US dollar shows signs of weakness ahead of the jobs report. We should expect volatility to increase as traders position themselves for the Federal Reserve’s next signal, which will likely dictate market direction through September.
