At 7.10am, the dollar was buying 70.1 US cents, a significant drop from its value on Good Friday (71.5 US cents).
The currency’s sell-off was sparked by yesterday’s weak consumer price index (CPI) — with the figures revealing that core inflation (at 1.4pc) had drifted to its lowest level in at least 16 years.
Inflation has now been stuck below the Reserve Bank’s 2-3 per cent target band for three years.
Last week, the RBA said it would be “appropriate” to cut rates if unemployment rose and inflation “did not move any higher”.
Job vacancies data released yesterday by the Commonwealth Department for Jobs and Small Business showed the biggest monthly fall in employment ads for six years, which generally foreshadows a rise in the unemployment rate.
Two rate cuts in 2019
These latest developments have led to analysts from Australia’s major banks upgrading their rate cut expectations.
“The downward surprise to core inflation in the first quarter leaves the RBA with little choice but to cut the cash rate by 25 basis points at its May meeting,” ANZ economists Hayden Dimes and David Plank wrote in a note.
They also both expected a second rate cut to happen in August.
Australia’s central bank has kept rates on hold at the record low 1.5 per cent for the past two-and-a-half years.
But if the RBA slashes rates twice in 2019, the official cash rate would fall to 1 per cent.
Meanwhile, Commonwealth Bank’s Elias Haddad said market expectations of the RBA cutting rates next month soared to 64 per cent — despite the federal election being held in the same month.
“Swap market pricing for a 25 basis point RBA policy rate cut surged from 10 per cent to 64 per cent in May,” he said.
But Mr Haddad believes the widely-expected rate cut will happen in June — with a second cut to happen by the end of this year.
“A 25 basis point RBA rate cut in June is fully priced and a second 25 basis point cut is priced by the end of 2019,” he said.
“We have removed the rate hike we had pencilled in for the end of 2020 as a result.”
These banks join the other two majors, Westpac and NAB, that were already predicting two interest rate cuts this year.
Wall St takes a breather ahead of tech results
The Australian share market is closed today for Anzac Day.
Meanwhile, Wall Street ended its day slightly weaker on Wednesday (local time) — retreating from the record-highs that the S&P 500 and Nasdaq reached in the previous session.
Investors traded cautiously as they waited for more companies to release their quarterly earnings.
The Dow Jones index closed 59 points lower, down 0.2 per cent, to 26,597.
The benchmark S&P 500 slipped 0.2 per cent to 2,927, and the tech-heavy Nasdaq dropped 0.2 per cent to 8,102.
After US markets closed, several major technology companies posted a mixed-bag of results.
Facebook shares jumped 8.6 per cent in after-hours trade.
The social media giant reported a higher-than-expected quarterly revenue of $US15.1 billion (up 26 per cent).
It said that its advertising sales surged 26 per cent to $US14.9 billion in the first quarter, and its monthly active users rose 8 per cent to 2.38 billion.
However, the company allocated more funds towards paying a potential penalty from the US Federal Trade Commission — lifting its provision from $US3 billion to $US5 billion.
The FTC has been looking into whether Facebook inappropriately shared 87 million of its users’ personal information with the now-defunct British political consulting firm Cambridge Analytica.
Meanwhile, Tesla said it would return to profit in the third quarter — and its shares are flat in extended trading.
The electric vehicle maker, which is currently operating at a loss, has been struggling to deliver cars to customers on time.
However, Tesla confirmed that it expects to deliver 360,000-400,000 cars in 2019.
The company also said that it may produce up to 500,000 vehicles this year, provided its Gigafactory in Shanghai is able to achieve volume production in the fourth quarter.