The Australian dollar plunged more than one US cent, after a surprise interest rate cut by the Bank of Canada and on expectations of a huge economic stimulus package from the European Central Bank (ECB).

At 0700 AEDT on Thursday, the local unit was trading at 80.89 US cents, down from 82.13 cents on Wednesday.

Early on Thursday morning, it fell as low as 80.78 US cents, its weakest level since January 14.

Westpac senior market strategist, Imre Speizer, said the Australian and New Zealand dollars were the worst performing currencies overnight.

“A couple of surprises last night were responsible for sharp falls in the Australian dollar and the New Zealand dollar,” Speizer said.

“First, a Bloomberg story citing unnamed ECB officials said the ECB will announce a Quantitative Easing program much bigger than the market expected, 50 billion euros (A$75 billion) per month until December 2016.

“Then, Canada’s central bank surprised with a 25 basis point rate cut to 0.75 per cent, citing lower oil prices.”

The Australian dollar was also weighed by a US dollar rally after new data showed that construction of US homes rose 4.4 per cent in December, well above the 1.2 per cent rise expected by analysts.

Speizer said he is expecting more volatility for the Australian dollar when the ECB makes its announcement late on Thursday evening, Australian time.