The Australian dollar slipped below US78¢ on Friday, continuing its decent in the wake of weak business investment data on Thursday and as the greenback recovered on stronger than expected US inflation data. The currency was buying US77.92¢ in late trade on Friday.

Market expectations based on overnight interbank swaps of a rate cut by the Reserve Bank of Australia on Tuesday are now above 50 per cent, up from a 38 per cent chance before the capital expenditure data was released. A growing majority of bank economists are also expecting the RBA to cut to a new record low of 2 per cent on Tuesday.

JPMorgan analyst Stephen Walters was one of those with a change of mind.

"[Thursday's] stinker of a business investment survey ... was the swing factor on our change of call," he wrote in a research note on Friday. "The sober message from [Thursday's] report is too disturbing to ignore.

"In a fresh change of forecast, we now expect the Reserve Bank to lower the cash rate a further 25 basis points next Tuesday to a fresh record low of 2 per cent."

Friday night data from the US, where fourth-quarter 2014 gross domestic product is widely expected to be revised down to 2.1 per cent from 2.6 per cent, was expected to impact the Aussie.

"It leaves the Aussie open to further selling if GDP is not as bad as traders feared," said ThinkForex senior market analyst Matt Simpson. "If it is lowered to around 2.1 per cent then we could see an upside move towards US78.3¢."

Overall, the foreign exchange market has become "dead calm" thanks to the US Federal Reserve talking down imminent interest rate rises, according to analysts.

Federal Reserve chair Janet Yellen told the Senate Banking Committee during the week it was "unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of Federal Open Market Committee meetings".

Market expectations had been for a June rate increase, but minutes released from the latest FOMC meeting have led some to speculate that a September move, or later, could be in the cards. The current US Federal Reserve cash rate is 0.25 per cent.

JP Morgan's Global FX Volatility Index, a measure of anticipated price swings, fell to 8.93 per cent, the lowest since December 2 and down from 11.68 per cent in January.

"More notable than spot moves is the collapse in foreign exchange volatility that is under way, with Yellen and Greece behind us," Adam Cole, head of global currency strategy at Royal Bank of Canada's RBC Capital Markets unit, wrote in a note.

A Societe Generale paper, by Kit Juckes, also noted the collapse in the volatility of the foreign exchange market.

Labelled "dead calm", the paper called Ms Yellen's speech "a big hiccough in the move to higher volatility".

"Janet Yellen has done a fair bit in recent days both to help stop the dollar's advance and to suck volatility out of the FX market," said Mr Juckes.

"The prospect of a shift in Fed policy promises a move to a sustained period of higher volatility, but the talk of patience, and the emphasis on flexibility when the Fed finally acts, soften that effect."