What are the most important events for today?

The main highlight of the European session was the publication of the UK labor market report. The data was better than expected, but there is the usual caveat of unreliability. We will also see the German ZEW, but it will not change the market pricing. The next important releases will be the Canadian CPI and the New Zealand CPI as they have the potential to influence the pricing of the market.

12:30 GMT/08:30 ET – Consumer Price Index for Canada in September

The Canadian CPI Y/Y is expected to be at 1.8% versus 2.0% previously, while the M/M reading is seen at -0.2% versus -0.2% previously. The underlying inflation metrics are more important to the BoC, so the market will focus on them. Trimmed median CPI Y/Y is expected to be 2.5% vs. 2.4% prior, while median CPI Y/Y is expected to be 2.3% vs. 2.3% prior.

The latest weak Canadian CPI increased the likelihood of a 50 basis point cut at the upcoming meeting as BoC’s Macklem hinted at the possibility of a larger cut if growth and inflation weaken more than expected.

The market reduced these probabilities following the surprisingly strong Canadian retail sales, GDP report and US NFP report. However, expectations for a 50 basis point cut increased again and the probability was around 52% just before the release of the Canadian jobs report on Friday.

These probabilities fell to 36% after a strong report, but rose again to around 50% after the weak BoC Business Outlook Survey. At any sign of weakness, the market is clearly pushing for a 50 basis point cut. Therefore, we can expect the market to increase the chances of a 50 basis point cut if we get a weak CPI report.

21:45 GMT/17:45 ET – New Zealand CPI for Q3

New Zealand’s Q3 consumer price index is expected to be 2.3% compared to 3.3% last year, while the Q/Q figure is expected to be 0.7% compared to 0.4% last year.

New Zealand’s core inflation rate fell within the 1-3% target band in the last report, and with the unemployment rate at its highest since 2021 and high-frequency indicators remaining weak, the RBNZ was last cut by 50 basis points.

The market expects a further 50 basis point cut at the upcoming November meeting and a total of 152 basis point easing by the end of 2025.

Central bank speakers:

• 15:30 GMT/11:30 ET – Fed’s Daly (neutral – voters)
• 17:00 GMT/13:00 ET – Fed Chairman Kugler (Pigeon – Voters)
• 22:00 GMT/18:00 ET – Hunter of the RBA
• 22:45 GMT/18:45 ET – RBNZ’s Silk