NZD/USD moves above 0.6100, eyes on US Core PCE

• NZD/USD halts its losing streak ahead of the release of US Core PCE.
• The New Zealand Dollar may face challenges as the 10-year government bond yield has fallen below 4.85%.
• The hawkish remarks of the Fed officials helped the US Dollar to hold ground.

NZD/USD breaks its three-day losing streak, trading around 0.6130 during the European session on Friday. The New Zealand Dollar (NZD) may face a challenge as the 10-year government bond yield fell below 4.85%, retreating from one-month highs.

The Reserve Bank of New Zealand (RBNZ) has raised its forecast for a peak in interest rates and delayed the timing for any rate cut. The RBNZ kept its cash rate at a 15-year high of 5.5%, indicating that restrictive policy needs to be maintained longer to ensure inflation returns to the 1-3% target range.

On Thursday, New Zealand Finance Minister Nicola Willis stated that the Treasury sees inflation falling to below 3% in Q3 and easing to 2% around 2026. The New Zealand treasury sees NZ GDP contracting in H1 2024, and growth in H2 2024, as per the official transcript from the New Zealand Government's website.

On the USD front, the US Gross Domestic Product (GDP) Annualized for the first quarter was revised lower to 1.3% from 1.6%. Additionally, US weekly Initial Jobless Claims for the week ending on May 24 rose to 219,000 from the previous week's 216,000, slightly exceeding the market consensus of 218,000.

Investors are awaiting the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, which will be released on Friday. If the data continues to soften, it could reignite the debate over potential rate cuts in September, weakening the US Dollar and underpinning the NZD/USD pair.