The Australian dollar tumbled today after surprisingly weak inflation numbers, while the US dollar and the yen are in defensive positions in anticipation of the Fed and BoJ meeting. The Australian dollar fell more than 1% in the morning and was trading at 0.7635 after data showed that consumer price index in Australia unexpectedly fell by 0.2% in January to March.
Preliminary estimates were for a rise of 0.3%. This number increased the speculations that RBA will defend its inflation target by cutting interest rates. The Australian dollar rose this month by almost 15% compared to seven year low in January, thanks to a recovery in commodity prices. Growing expectations of a reduction in interest rates, however, may stop the rally.
AUD/USD is trading sharply lower, currently at 0.7592, as ahead of the publication of the inflation figures the pair plunged with 1.65% to 0.7619.
Meanwhile AUD/JPY dropped below 85 mark, dragging down the aussie with 1.6%.