This week’s focus will be on the RBNZ and Bank of Canada meetings on Wednesday and US CPI on the same day. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes how these events could impact the FX market.

CAD/NZD bulls need a BoC hike

We’ve already seen higher-than-expected Norwegian CPI data prompt a further jump in NOK/SEK, which shows central bank behaviour remains dominant, but we expect 0.3% increases for both headline and core CPI in the US. 

We probably need a 0.2% (preferably in the core) print to give EUR/USD a chance of getting back above 1.10 (and USD/JPY moving towards 140). Absent that, the market’s looking for a 25 bps BoC hike (to 5%), and no change from the RBNZ (5.5%). Assurances the latter is ‘done’ and concern about China could be enough for NZD/CAD to head lower again.