AUDUSD has not reacted significantly to the Caixin Services PMI data.

Despite IHS Markit reporting hotter-than-expected Caixin Manufacturing data, the AUDUSD pair has remained weak. The economic statistics came in at 55.0, above the expectation of 50.5 and the previous report of 52.9. After the lifting of limitations on the movement of people, goods, and machines, the Chinese economy is essentially on the road to recovery.

The RBA’s interest rate will peak at 3.85% according to Reuters.

According to a Reuters survey on the RBA’s interest rate guidance, the central bank would raise its interest rate by 25 basis points (bps) to 3.60% on Tuesday, followed by another rise next quarter before halting until next year, raising the peak rate higher than previously believed.

Meanwhile, the US Dollar Index (DXY) is looking for a reprieve at 104.80 following a severe drop. The Dollar Index is projected to stay flat as investors await US ISM Services PMI data for additional encouragement. After a bullish Thursday, S&P500 futures have extended their losses in the Asian session, signaling that investors’ risk appetite is diminishing.

The administration and the People’s Bank of China (PBOC) are committed to stimulating domestic demand through more stimulus and reform initiatives. It is worth mentioning that Australia is China’s largest trading partner, and stronger service PMI in China will support the Australian Dollar in the coming months. Meanwhile, a recent dip in Australia’s monthly Consumer Price Index (CPI) has failed to dampen the Reserve Bank’s hawkish predictions from Australia (RBA).

The monthly CPI (Jan) fell sharply to 7.4%, compared to the expected 8.0% and the previous announcement of 8.4%. No RBA officials have said that Australian inflation has peaked. Also, there is a significant difference between existing and desired inflation. As a result, the RBA will continue its hawkish posture for a longer length of time.