Consumer Sentiment Tumbles To Record Low, Kiwi Is Not Bothered

The kiwi dollar has been unfazed by a poor reading of New Zealand's quarterly Westpac Consumer Confidence, which slumped to its worst level in a data series that goes back to 1988. The index fell to 78.7 in the three months through June from 92.1 prior, as "household budgets are being squeezed in a way that they haven't been for decades."

• Westpac notes that "if there is a more abrupt slowdown in spending than the RBNZ anticipates, then it's likely that increases in the cash rate will be more measured," but they "continue to forecast a peak in the cash rate of 3.5%.
• Truth be told, the survey did not reveal much in the way of fresh insights, with the impact of rising living costs and tightening monetary conditions on household budgets reflected in recent data releases.
• This leaves NZD/USD trading flat at $0.6333, holding onto Monday's gains. Improvement in risk sentiment helped push the rate higher at the start to the week, as equity markets firmed during a public holiday in the U.S.
• From a technical standpoint, bulls need NZD/USD to rip through Jun 16 high of $0.6396 before setting their sights on key resistance from Jun 3 high of $0.6576. On the flip side, bears see Jun 14 low of $0.6197 as their initial target.
• Looking further afield, Stats NZ will publish monthly trade data on Wednesday, with the RBNZ set to release credit card spending later that day.

Fig. 1: New Zealand Westpac McDermott Miller Consumer Confidence vs. New Zealand 2-Year Government Bond Yield (%)