The main highlight in the European session was the release of the UK Labour Market report. The data was better than expected but there's the usual caveat of unreliability. We will also see the German ZEW but it's not going to change anything in terms of market pricing. The next important releases will be the Canadian CPI and the New Zealand CPI as they have the potential to influence the market's pricing.

12:30 GMT/08:30 ET - Canada September CPI

The Canadian CPI Y/Y is expected at 1.8% vs. 2.0% prior, while the M/M figure is seen at -0.2% vs. -0.2% prior. The underlying inflation measures are more important for the BoC, so that’s what the market will be focused on. The Trimmed Mean CPI Y/Y is expected at 2.5% vs. 2.4% prior, while the Median CPI Y/Y is seen at 2.3% vs. 2.3% prior.

The last soft Canadian CPI raised the probabilities for a 50 bps cut at the upcoming meeting as BoC’s Macklem hinted to a possibility of delivering larger cuts in case growth and inflation were to weaken more than expected.

The market scaled back those probabilities following the surprisingly good Canadian Retail Sales, the GDP report and the US NFP report. The expectations for a 50 bps cut picked up again though and the probability was standing around 52% right before the Canadian Labour Market report on Friday.

Those probabilities dropped to 36% following a strong report but got back around 50% after the weak BoC Business Outlook Survey. The market is clearly pushing for that 50 bps cut at any sign of weakness. Therefore, we can expect the market to increase the chances of a 50 bps cut in case we get a soft CPI report.

Canada Trimmed Mean CPI YoY
Canada Trimmed Mean CPI YoY

21:45 GMT/17:45 ET - New Zealand Q3 CPI

The New Zealand Q3 CPI Y/Y is expected at 2.3% vs. 3.3% prior, while the Q/Q figure is seen at 0.7% vs. 0.4% prior.

The core inflation rate in New Zealand fell inside the 1-3% target band in the last report, and given the unemployment rate at the highest level since 2021 and high frequency indicators continuing to show weakness, the RBNZ cut by 50 bps at the last meeting.

The market expects another 50 bps cut at the upcoming meeting in November and a total of 152 bps of easing by the end of 2025.

New Zealand Core CPI YoY
New Zealand Core CPI YoY

Central bank speakers:

  • 15:30 GMT/11:30 ET - Fed's Daly (neutral - voter)
  • 17:00 GMT/13:00 ET - Fed's Kugler (dove - voter)
  • 22:00 GMT/18:00 ET - RBA's Hunter
  • 22:45 GMT/18:45 ET - RBNZ's Silk