Tomorrow Is CPI Day: UK, CA & NZ

Overnight and tomorrow we have a set of data releases that could directly affect the price movement of major currencies.

The NZ inflation data is especially interesting since it’s only published once per quarter. And investors are really keen to find out if the RBNZ’s moves have had any effect!

Later, the other two major banks that have not yet joined the race to the bottom might be swayed to change their outlook with new inflation data.

We could see a move of several dozens of pips following the release.

In chronological order, we have the following.

New Zealand

The consensus of expectations is for Third Quarter CPI to come in at 0.7%. This is compared to 0.6% in the prior quarter.

A result like this would be good news for the RBNZ since that would put the annualized rate at 1.5% compared to 1.7% in the prior reading. This is still far away from the target, but better than what the central bank has been projecting. Analysts broadly agree that it’s not enough to deter the next rate cut.

(Reminder that earlier in the day we get the GDT Index, which we can also expect to increase over the prior month. That could turn the trend towards NZD strength ahead of the inflation data.)

As a measure of comparison, the RBNZ’s projection for rates is just 0.5% for last quarter, and an annualized rate of 1.3% by the end of the year.

If we were to get a surprise result below those numbers, it would likely be quite negative for the NZD, which is already under pressure from external factors.

United Kingdom

The UK’s inflation rate has been keeping near the BOE’s target. In fact, it has only slipped below it in the last couple of months, inviting the specter of a potential rate cut.

The consensus of expectations won’t change the scenario much. 1.8% annualized CPI is projected, compared to 1.7% in August. On a monthly basis, that would mean no change in prices.

It’s questionable how much the BOE still relies on the harmonized CPI rate. But, for GBP/EUR cross traders, it’s still a useful measure. Projections are for annualized HCPI to remain healthy at 1.9% compared to 1.7% in the prior reading.

Canada

Despite all the turmoil in major markets, Canada has remained comfortably on the sidelines.

It’s had a steady economy that hasn’t required any intervention from the BOC. However, inflation trends have been slightly weaker, and we are expecting similar results this time around.

Expectations are for monthly core CPI (the one that usually moves the markets) to come in at 0.0%, up from -0.1% in the prior month. Annualized, this comes in just a hair below target at 1.9%, just like last month.