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China rate cut boosts commodity currencies

The Chinese central bank surprised the market on Friday by cutting rates for the first time since 2012. Good news for commodity currencies with markets expecting demand for raw materials to rise in response.

Faraday Research analyst Thomas Light picks out the Canadian dollar as the commodity currency arguably benefitting the most from the Chinese move, showing relative strength to both the Aussie and Kiwi in recent sessions.

Rather than try and pair the Canadian dollar against a very strong U.S. dollar, Thomas suggests matching it up against a weaker currency like the euro, particularly given ECB President Mario Draghi’s dovish comments on Friday which hinted at further stimulus.

01:20 minutes
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