Australian dollar extends gains, hits three-week high

[Redator]

The Australian dollar is coming off a positive week and has extended its gains on Monday. In the North American session, AUD/USD is trading at 0.6556, up 0.27% on the day. Earlier, the Aussie rose as high as 0.6560, its highest level since August 11. With US markets closed for Labor Day, we're unlikely to see stronger movement from AUD/USD during the day.

China's weak manufacturing could hurt Australian dollar

China's manufacturing sector continues to contract and that could spell trouble for the Australian economy and the Aussie. China's manufacturing PMI for August inched higher to 49.4 from 49.3 in August. This missed the market forecast of 49.5 and marked the fight straight month of contraction in manufacturing.

The manufacturing industry has been dampened by weak global demand and US tariffs on Chinese products. The drop in manufacturing activity means there has been less demand for iron ore from Australia, which is used in the production of steel. This has resulted in a decline in iron ore prices, which has weighed on the Australian dollar and dampened Australia's export-reliant economy.

US PCE core inflation rises to 2.9%

The US core personal consumption expenditures price index (core PCE), the Federal Reserve's preferred inflation indicator, ticked higher to 2.9% in July, up from 2.8% in June. This matched the market estimate and was a five-month high. Monthly, core PCE rose 0.3%, unchanged from June and in line with the market estimate.

The slight rise in US core inflation has raised expectations of a rate cut at the Fed's September 17 meeting to 89%, up from 86% just before the core PCE release on Friday.

AUD/USD Technical

• AUD/USD is testing resistance at 06552. Above, there is resistance at 0.6563 and 0.6578
• 0.6537 and 0.6526 are providing support

AUDUSD 1-Day Chart, September 1, 2025

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