Consumer Confidence Plunges, Inflation Expectations Soar

NZD/USD went bid Thursday as the greenback sold off across the board after the ECB delivered their monetary policy decision. Its weakness was linked to fresh demand for Eurozone's single currency as ECB Pres Lagarde offered only a mild pushback against rate hike expectations.

• RBNZ Gov Orr told the audience of an Institute of Financial Professionals conference that "monetary policy has largely run its easing course globally," which means that "we're going into a very different inflation and interest rate environment."
• Orr's comments delivered in the early afternoon on Thursday appeared to roughly coincide with a mild uptick in RBNZ tightening bets, but this hawkish repricing has been unwound this morning. The OIS strip currently prices 33bp worth of OCR hikes at next month's meeting.
• ANZ Consumer Confidence Index plunged 6.8% M/M to 98.0 in September from 104.5 recorded in August, "with both perceptions of current conditions and expectations down sharply." ANZ noted that "inflation expectations went ballistic, rising more than 1pp to 6.2%," which was "likely influenced by media coverage around the CPI outturn."
• Elsewhere, New Zealand's budget deficit for the three months through the end of September stood at NZ$5.35bn and was wider than forecast in the May budget (NZ$4.57bn), as the government implemented a number of fiscal support measures.
• The main point of note on the local docket next week is quarterly labour market report, due Wednesday.
• NZD/USD gave up a dozen pips or so this morning and last sits at $0.7189. Bears eye Oct 25 low of $0.7130 for initial support and a break here would open up the 200-DMA at $0.7102. Bulls need a clearance of yesterday's/Oct 21 highs of $0.7217/19 before targeting Jun 7 high of $0.7243.