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Despite IHS Markit's release of positive Caixin Manufacturing PMI (January) data, the AUD/USD pair has set a new daily low at 0.7064. The economic statistics came in at 52.9, much above the consensus estimate of 47.3 and the previous report of 48.0. Despite the Lunar New Year celebrations in the last week of January, China's Services PMI has remained optimistic.

Notable is the fact that Australia is China's top trading partner and Services PMI the Australian Dollar's currency.

Tuesday's anticipated interest rate announcement by the Reserve Bank of Australia (RBA) is likely to influence the Australian Dollar's subsequent movement. In light of the unexpected increase in the Australian Consumer Price Index (CPI) to 7.8% in the fourth quarter of CY2022, RBA Governor Philip Lowe may maintain his aggressive interest rate stance.

Analysts at Deutsche Bank Australia anticipate that the RBA will likely raise the Official Cash Rate (OCR) to 4.1%, citing the latest inflation update, which revealed a slightly higher-than-anticipated 7.8% increase in the CPI. “While the RBA will likely proceed more slowly in 2023 than it did in 2022, we now estimate four additional 25 basis point raises this year: 25 basis points in each of February and March, and 25 basis points each at the May and August meetings” as stated by Forbes Advisor.

In the meantime, investors have been risk-averse due to rising nervousness preceding the release of Nonfarm Payrolls (NFP) statistics from the United States. S&P500 futures and other risk-perceived assets are under intense pressure. After a corrective move, the US Dollar Index (DXY) has returned to about 101.50 and is anticipated to continue under the control of bulls going forward. In anticipation that the Federal Reserve (Fed) may take a halt in its policy tightening, rates on 10-year US Treasuries have declined to around 3.38 percent.

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