NZD/USD trims gains below 0.6100 ahead of US PPI data

• NZD/USD trades on a weaker note around 0.6090 in Friday’s early Asian session. 
• Odds of Fed rate cuts are growing after the softer-than-expected June US CPI inflation report. 
• The RBNZ's dovish monetary policy statement undermines the Kiwi against the USD. 

The NZD/USD pair trims gains near 0.6090 during the early Asian session on Friday. The pair loses traction after retreating from the previous session high of nearly 0.6135. Later on Friday, investors will keep an eye on the US June Producer Price Index (PPI) and the preliminary Michigan Consumer Sentiment gauge.

Data released by the US Bureau of Labor Statistics (BLS) on Thursday showed that the US Consumer Price Index (CPI) rose 3.0% on a yearly basis in June, compared to a rise of 3.3% in May. This reading came in below the market consensus of 3.1%. Meanwhile, the annual core CPI, which excludes volatile food and energy prices, climbed 3.3% YoY in June, below the forecast and May's increase of 3.4%. On a monthly basis, the CPI declined 0.1%, while the core CPI was up 0.1%. 

The softer US inflation data has triggered the expectation that the US Federal Reserve (Fed) would lower its borrowing costs this year, which might weigh on the US Dollar (USD) in the near term. Investors are now pricing in a nearly 89% chance of a September Fed meeting rate cut, from 73% on Wednesday and around 50% a week ago, according to CME Group’s FedWatch Tool.

On the other hand, a less hawkish stance of the Reserve Bank of New Zealand (RBNZ) is likely to exert some selling pressure on the New Zealand Dollar (NZD) for the time being. The central bank left its Official Cash Rate (OCR) unchanged for the eighth consecutive meeting at 5.5% on Wednesday, as expected but hinted at possible rate cuts in August if inflation decreases as expected.