AUD Recovers To Levels Seen Prior to Canadian Interest Cuts

AUD Recovers To Levels Seen Prior to Canadian Interest Cuts
February 5, 2015


The Bank of Canada interest rate cut of 25 basis points last week, was quickly followed by RBA (Reserve Bank of Australia), who cut their interest rates to a record low at their first meeting of 2015.

The central bank cutting the interest rates in such a short period of time made nothing but stimulated volatility in a market – which was pretty volatile already.

As a result, the AUD (Australian Dollar) was sold aggressively across the board and it seemed that the 0.75 level against the US dollar (the personal recommendation/guiding given by RBO Governor Stevens), was coming sooner rather than later.

However, in a stunning move, London opened the very next day and started to buy the Australian dollar. Before you knew it, the entire move caused by the RBA was erased and the AUDUSD printed even higher levels than the ones before.

What can cause such wild moves?

One reason would be that the rate cut was already priced in. It was no secret that if Bank of Canada saw the Canadian economy as being affected by the fall in oil prices then the RBA will see the same effects on the Australian economy as well.

The other reason would be that oil rallied since last Friday and was tearing its way higher across the board, causing the USDCAD and AUDUSD to correct its recent moves.

However, whatever seemed to be the reason for the pullback, these kind of moves were ideal for currency traders as quick profits could be made. However, one should still be aware that this comes with high risks and losses are possible as well. If you are relatively new to currency trading, we recommend you learn to trade currencies with binary options and progress to Forex.



Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world

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