With the Bank of Canada’s surprise rate cut on Wednesday, the odds have further increased that the Reserve Bank of Australia will soon follow suit.

While most economists had expected the Bank of Canada (BoC) to maintain a dovish stance on monetary policy through words rather than actions, the central bank shocked the financial world this week by lowering its benchmark overnight rate by a quarter point, to 0.75%.

Prior to that, the BoC’s short-term rate had been stuck at 1% since late 2010, the longest such pause in the central bank’s history. The central bank kept rates low to help the export sector take over leadership of the country’s economy from debt-burdened consumers.

And in recent months, there’s been increasing evidence that this long-awaited transition is finally underway. But while the BoC has been hoping that the country’s beleaguered manufacturing sector would pick up steam on the export front, it’s important to remember that energy products are Canada’s top export category, accounting for about a quarter of the country’s exports by value.

So crude oil’s collapse finally forced the BoC to take action. The central bank believes a rate cut is a necessary insurance policy against a sharp drop in energy sector investment.

Although Canada’s resource space accounted for 8.1% of gross domestic product (GDP) in 2013, according to Statistics Canada, the sector is estimated to have been responsible for as much as 35% of private non-residential investment. Many of the country’s energy exploration and production companies have already announced dramatic cuts to 2015 capital budgets.

Similarly, Australia is enduring a decline in mining investment now that the resource boom is over. And iron ore, which accounted for about 22.6% of Australia’s exports by value in 2013 and is by far the country’s top export, has suffered a decline equivalent in magnitude to that of oil.

Still, it’s worth noting that Australia’s export sector contributes markedly less to the country’s GDP than Canada’s exports do to its own GDP. According to the World Bank, exports account for about 30% of Canada’s GDP, while Australia derives just 20% of GDP from its export sector.

Of course, GDP can’t fully account for the way money earned in one area flows through the rest of the economy, so while these figures provide some context, they paint only a partial picture, at best.

Like the BoC, the Reserve Bank of Australia (RBA) has kept short-term rates low, in this case at an all-time low of 2.5%, to help the country’s economy find growth from its non-mining sectors.

Just as in Canada, Australia’s housing market was the first beneficiary of historically low rates, and both countries have their own housing bubbles with which to contend. Like Canada, Australia’s economy began to show progress recently in its rotation away from the resource sector, with investment by non-resource firms growing by 5.5% in the third quarter versus a 3.5% drop in the mining sector, according to government data.

Both central banks have also hoped low rates and a dovish stance would undercut their exchange rates, which have been rapidly falling over the past year-and-a-half following a period of unusual relative strength. A lower exchange rate can help boost a country’s exports by making prices more competitive when translated into foreign currencies.

A significant portion of the decline in each country’s exchange rate has been driven by the U.S. Federal Reserve’s hawkish stance on monetary policy. With the BoC’s monetary policy now clearly headed in the opposite direction of the Fed, traders are increasingly betting on further easing from the RBA.

First, the Australian dollar quickly dived following news of the BoC’s rate cut, and then dropped even further when the European Central Bank (ECB) made its own big move on Thursday, with the announcement of an EUR1.1 trillion bond-buying program.

In March, the ECB plans to start buying EUR60 billion of bonds each month, with hopes of bringing down long-term interest rates to stave off deflationary pressures and stimulate the Continent’s moribund economy.

The aussie has fallen by 2.5 cents since Tuesday, which is a sizable move in the world of currencies. It currently trades near USD0.792, its lowest level since the Global Financial Crisis.

And while a clear majority of traders still expect the RBA to leave rates unchanged at its February meeting, futures data aggregated by Bloomberg suggest a still-substantial 32.3% probability of a cut. Meanwhile, the probability of a rate cut of at least a quarter point occurring at the March meeting has jumped to 65.4% from 40.6% a week ago.

As Westpac chief economist Bill Evans told The Sydney Morning Herald, “What we’re seeing is a lot of central banks are making surprise decisions at the moment–Canada, India, Denmark. So in this environment of central banks pushing rates down and adopting easing strategies, it becomes a lot more respectable to do that.”

Portfolio Update  

By Khoa Nguyen

Shares of CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY) took a hit on Jan. 15 due to a sudden surge in the Swiss franc, which at one point had jumped as high as 30% versus the euro and 25% versus the U.S. dollar.

The stronger Swiss franc was due to the Swiss National Bank (SNB) unexpectedly lifting the cap on the country’s foreign-exchange rate. The cap was implemented in 2011 to prevent the Swiss franc from being overvalued.

Central bank watchers believe that the SNB’s move was in anticipation of additional stimulus from the European Central Bank (ECB), which was finally announced on Thursday. The EUR1.1 trillion bond-buying program will commence in March, with the central bank planning to buy EUR60 billion of bonds per month through 2016.

Swiss equities lost 10% of their value as the money they make outside their home market would be much lower when converted into Swiss francs. The same goes for companies that have substantial operations in the country.

Although CSL reports in U.S. dollars, its main manufacturing plant, which accounts for about 20% of its costs, is located in Bern, Switzerland. Investors fearing its cost exposure to the Swiss franc sent the stock down 4%, to $83 per share. However, the shares have since recovered, and this won’t have a significant impact on the company’s bottom line.

In its annual report, the company estimates that every 1% increase in the Swiss franc against the U.S. dollar would wipe out about $2.3 million in profits. If the franc’s 18% appreciation against the U.S. dollar persists, this would cost the company roughly $41 million. That amount translates into about 2.7% of the company’s $1.47 billion in projected earnings for 2015.

A spokesperson for CSL said the company had not anticipated the impact of the currency change and will detail its effect in the results it reports for the second half of its fiscal year in February.

GPT Group (ASX: GPT, OTC: GPTGF) announced it will buy back an 8% stake in the firm held by Singaporean sovereign wealth fund GIC. That stake is in the form of a $250 million perpetual note with an annual 10% coupon.

GPT will pay for this with $325 million it raised through a fully underwritten issue at $4.23 per share.

Management believes the repurchase of the securities will be accretive to 2015 funds from operation (FFO) per share. However, the transaction will reduce net tangible assets (NTA) by an estimated 1% as a result.

The deal also allows GPT to maintain a strong capital position, and it reduces the annual costs paid on the 10% coupon.

CEO Michael Cameron said, “Undertaking an equity raising in order to fund the redemption ensures GPT maintains its strong balance sheet position and is well placed for growth in 2015.”

The company also announced its key financial results for 2014 on a conference call ahead of its earnings report on Feb. 23.

NTA per security is estimated at AUD3.94 as of Dec. 31, 2014. This represents growth of 4% compared to the prior-year period.

The group generated FFO of $452 million, or $0.268 per unit, up 4.1% year over year and in line with management’s earlier guidance.

The company expects FFO per unit growth of 5% in fiscal 2015, driven by a rising contribution from its office portfolio, and continued strong performance of its retail portfolio. The group remains in a strong capital position with net gearing of 26.4%.

Following the news, analysts at Goldman Sachs and Macquarie reaffirmed their buy ratings, while analysts at JPMorgan, UBS and Morningstar reaffirmed their “hold” ratings.

Analyst sentiment toward GPT is essentially neutral, with two “buys,” 11 “holds,” and four “sells.” The consensus 12-month target price is AUD4.28 per share, which is 4.9% below its recent price.