The main event in the European session was the UK Employment report which showed once again some softness although wage growth continues to run hot. This shouldn't change anything for the BoE as a 25 bps cut at the upcoming meeting is mostly priced in. In the American session, the focus will switch to the Canadian and New Zealand inflation data.
13:30 GMT/08:30 ET - Canada December CPI
The Canadian CPI Y/Y is expected at 1.8% vs. 1.9% prior, while the M/M measure is seen at -0.4% vs. 0.0% prior. The Trimmed Mean CPI Y/Y is expected at 2.4% vs. 2.7% prior, while the Median CPI Y/Y is seen at 2.4% vs. 2.6% prior.
As a reminder, the BoC cut interest rates by 50 bps at the last policy meeting but dropped the line saying “if the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further", which suggests that we reached the peak in "dovishness" and the central bank will now switch to 25 bps cuts and will slow the pace of easing.
The market sees an 82% chance of a 25 bps cut at the upcoming meeting and a total of 60 bps of easing by year end.
21:45 GMT/16:45 ET - New Zealand Q4 CPI
The New Zealand Q4 CPI Y/Y is expected at 2.1% vs. 2.2% prior, while the Q/Q measure is seen at 0.4% vs. 0.6% prior. As a reminder, the RBNZ cut interest rates by 50 bps as expected at the last meeting. The market is pricing a 53% chance of a 50 bps cut in February and a total of 105 bps of easing by year end.
