The Australian dollar sank to its lowest level in a week on Wednesday, dropping a third of a cent after data showed the economy had slowed sharply in the first quarter and the central bank said it expected benign economic conditions.
The Aussie tumbled to a low of 70.35 US cents, extending an overnight sell-off of around a full cent, after Australia posted just 0.2 percent gross domestic product growth in the first quarter, down from a revised 1.3 percent in the fourth quarter.
Market forecasts had centred on a 0.5 percent GDP rise in the first quarter.
"The GDP figures are a wake-up call for those who still think the RBA may be in play and for those who think the Australian economy is still firing on all cylinders," said ABN Amro strategist David Mozina.
The AUD had recovered to $0.7086/91, but was still well down on the $0.7161/66 here late on Tuesday. Interest rate markets rallied on the lessening risk of another tightening.