The Australian dollar is cratering - Here's what's happening in FX

Investing.com

The Australian dollar is cratering after consumer price index (CPI) came in way below expectations for first quarter, opening the door to a potential rate cut from the RBA next week.

The Aussie dollar is down by 2.0% to .7592 as of 7:47 a.m. ET.

Headline inflation fell by 0.2% for the quarter, below expectations of a 0.2% increase, which put the annual increase at just 1.3%.

This is the largest quarterly decline since the fourth quarter 2008, and it left the annual increase at the lowest level since the second quarter 2012, Business Insider Australia's David Scutt reported.

Still, the "overnight decline of AUDUSD is unlikely to enter into a broad AUD downtrend at this stage," argued a Morgan Stanley team led by Hans W. Redeker. "Instead, investors and even the RBA may downplay the inflation disappointment and hope rising commodity prices and the linked terms of trade improvement would push inflation higher in the next quarter."

As for the rest of the world, it's pretty quiet out there. Here's the scoreboard:

• The dollar index is weaker by 0.2% at 94.39 ahead of the FOMC announcement, which will cross at 2 p.m. ET. The Fed is expected to hold its key interest rate in a range of 0.25% to 0.50%. Since Fed Chair Janet Yellen won't be holding a news conference, economists will key their eyes on the wording of the statement.
• The British pound is little change at 1.4596 after the UK's economic growth slowed. GDP came in at 0.4% for the first quarter, below the 0.6% growth seen in the fourth quarter. "It's good news that Britain continues to grow, but there are warnings today that the threat of leaving the EU is weighing on our economy," Chancellor George Osborne said.
• The Japanese yen is little changed at 111.35 ahead of the Bank of Japan's Thursday meeting. Notably, Japan's former deputy economy minister told Bloomberg, "even at about 110 yen, I think the yen has strengthened too much."
• The euro is little changed at 1.1303 after Greek officials said Prime Minister Alexis Tsipras will call European Union Council President Donald Tusk later on Wednesday to request an emergency European summit on his country's troubled bailout program, reports the AP.