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Apr 08 - 02:55 PM

MUFG: CAD and NZD into This Week's BoC and RBNZ April Policy Meetings

By eFXdata  —  Apr 08 - 01:30 PM


MUFG analyzes the implications of the upcoming Bank of Canada (BoC) and Reserve Bank of New Zealand (RBNZ) policy meetings on the Canadian dollar (CAD) and New Zealand dollar (NZD). With both central banks expected to maintain current rates, the focus shifts to indications of forthcoming rate cuts, which are increasingly anticipated by the market.

Key Points:

  • BoC Policy Meeting Expectations: Despite expectations for unchanged rates, signals hinting at imminent cuts, particularly by June, could bolster the CAD. Factors like slowing core inflation and rising unemployment rates strengthen the case for a cut, balanced against unexpectedly robust GDP growth in January.
  • RBNZ's Positioning: The NZD faces potential volatility from the RBNZ meeting, especially if stronger cues suggest earlier rate cuts, potentially as soon as July or August. New Zealand's recent slip into a technical recession and Governor Orr's comments on normalizing interest rates underscore these expectations.
  • Market Pricing for Cuts: Current market pricing leans towards BoC cuts by June and anticipates a possible RBNZ cut in July or August, reflecting broader expectations of a shift towards easing.


The upcoming BoC and RBNZ meetings are pivotal for the CAD and NZD, with both currencies sensitive to the central banks' forward guidance on rate cuts. Given the BoC's potential rate cut signals and the RBNZ's more imminent easing stance, currency movements will likely hinge on the clarity and strength of these signals. For CAD, less explicit guidance on cuts could trigger a relief rally, while stronger indications of a near-term RBNZ cut could pressure the NZD. Investors and market watchers will closely monitor these developments for insights into each bank's policy trajectory amidst global economic adjustments.

MUFG Research/Market Commentary


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