NZD/CAD trades near 2-week low as currencies face CPI test

The NZD/CAD currency pair hovered just above a fresh two-week low on Tuesday ahead of Canadian and New Zealand CPI inflation figures that may provide more clues on central banks’ future interest rate paths.

Canada’s March report on CPI inflation is due out at 12:30 GMT.

In February, the annual inflation in the country decelerated to 2.8% to mark the lowest rate since June 2023.

Last week, the Bank of Canada left its target for the overnight rate intact at 5% and pledged to keep reducing its balance sheet, as policy makers again underscored upside risks to inflation.

The central bank said it expected inflation to stay close to the 3% level in the first half of 2024 before easing to the 2% target in 2025.

Meanwhile, the Q1 report on New Zealand’s CPI inflation is due out at 22:45 GMT.

Annual consumer inflation in New Zealand eased to 4.7% in the fourth quarter of 2023 – or the lowest rate since the second quarter of 2021.

Still, the rate remained well above the central bank’s target range of 1% to 3%.

Last week, the Reserve Bank of New Zealand kept its official cash rate unchanged at 5.5%, while extending the rate pause for a sixth consecutive policy meeting.

The RBNZ Board again pointed out the official cash rate would have to remain at a restrictive level for an extended period to allow annual consumer inflation to return to target.

Currency Pair Performance

As of 11:07 GMT on Tuesday the NZD/CAD currency pair was edging down 0.17% to trade at 0.8121.

During the Asian trading session, the minor Forex pair went down as low as 0.8110. The latter has been the pair’s weakest level since April 3rd (0.8078).