Ella 
NZD/USD broke a three-day losing streak and traded around 0.6130 in European trading on Friday. The New Zealand dollar (NZD) could face challenges as the 10-year Treasury yield fell below 4.85%, retreating from a one-month high.
The Reserve Bank of New Zealand (RBNZ) raised its forecast for the peak of interest rates and delayed the timing of any rate cuts. The RBNZ kept the cash rate at a 15-year high of 5.5%, indicating that restrictive policies need to be maintained for longer to ensure that inflation returns to the target range of 1%-3%.
On Thursday, New Zealand Finance Minister Nicola Willis said that the Treasury believes that inflation will fall below 3% in the third quarter and slow to 2% around 2026. According to official records on the New Zealand government website, the New Zealand Treasury believes that New Zealand’s gross domestic product (GDP) will shrink in the first half of 2024 and grow in the second half of 2024.
In terms of the dollar, the annual rate of US gross domestic product (GDP) in the first quarter was lowered from 1.6% to 1.3%. Additionally, initial jobless claims in the U.S. rose to 219,000 in the week ended May 24 from 216,000 the previous week, slightly above the consensus estimate of 218,000.
Investors are awaiting the Federal Reserve’s preferred inflation indicator, the core personal consumption expenditures (PCE) price index, which will be released on Friday. If the data continues to weaken, it could reignite discussions about a possible rate cut in September, which could help limit the downside for NZD/USD.
