Asian session: The Australian dollar tumbled

The Australian dollar tumbled on Wednesday after surprisingly soft local inflation data, while the dollar and yen were on the defensive after a broad retreat overnight ahead of policy decisions by both the Federal Reserve and Bank of Japan. It was the first time since 2009 the inflation gauge fell to a negative level, raising speculation that the Reserve Bank of Australia may have to consider rate cuts. The Aussie had risen almost 15 percent earlier this month from its near seven-year low touched in January, thanks to recovery in commodity prices, but rising expectations of a rate cut could halt the rally.

Other major currencies were mostly stable in Asia with dollar bulls seeming to suspect the Fed will sound dovish again, even though a rise in U.S. Treasury yields to five-week highs suggested other investors were primed for a more hawkish tone. The BOJ, on the other hand, could ease further. The Fed is considered certain to keep rates steady later on Wednesday, so the focus rests squarely on the tone of its statement. Traders said policymakers may be wary of sending too strong a message of an imminent policy tightening, particularly after another batch of disappointing data.

EUR/USD: during the Asian session the pair traded in the range of $1.1295-10

GBP/USD: during the Asian session the pair traded in the range of $1.4510-90

USD/JPY: during the Asian session the pair dropped to Y111.00

Based on Reuters materials