The surprise interest rate cut from the Bank of Canada wasn’t much of a surprise if you read my Daily Fundamentals from yesterday. With CPI dropping below 2 percent for the first time since June 2006, the central bank had plenty of room to respond to softening global growth. Although the BoC believes that growth is broadly in line with their expectations thanks to strength in domestic demand, the Canadian dollar has increased competitive pressures for exporters. They now expect inflation to be lower than projected over the next few months which left the door open for another interest rate cut. Interest rate decisions from Australia and New Zealand are up next. We do not expect either central bank to surprise the markets by changing interest rates. The RBA decision should be a nonevent since they do not release a statement when rates are unaltered. GDP will probably be the more market moving event. The RBNZ will be following up with their rate decision Wednesday afternoon. Unlike the RBA, New Zealand does make comments regardless of what they do with interest rates which could make tomorrow an interesting trading day for the Kiwi. The odds are skewed towards hawkish comments.