US yields jumped 10 to 18 basis points overnight on the curve after Fed Chairman Powell opened the door to a 50 basis point rate hike at the upcoming FOMC meeting. .
“If we conclude that it is appropriate to act more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common neutrality measures and adopt a more restrictive stance, we will do so as well. »
The tone of the Fed Chairs has become increasingly hawkish with each exit, and after a long slumber, the hawk within the Fed Chair is rapidly gaining altitude.
By contrast, earlier today Westpac New Zealand’s consumer confidence fell to 92.1 in the first quarter of 2022 from 99.1 in the last quarter of 2021. Anything below 100 indicates “that there are more New Zealanders who are pessimistic about the economic environment than there are those who are optimistic”.
Today’s drop brings the indicator to the lowest level since the 2008 global financial crisis and is driven by rising mortgage rates and rapidly soaring prices for household goods, food and fuel, all of which eat into household budgets.
Today’s slump in consumer confidence comes after the housing market began to slow and could raise questions about whether the RBNZ will have to raise interest rates as aggressively as the market has fixed.
Following weaker consumer confidence data, NZDUSD is trading slightly lower at 0.6876, having rejected resistance yesterday at 0.6925 from the 200-day moving month and March 7 high, leaving a double top in place.
As such, although below .6925/35, a short-term bearish bias is in place, looking for the NZDSD to turn lower towards support at .6800c. The stop loss on the downside view would be a sustained break/close above .6925/35.