NZD/USD falls to near 0.5950 as US Dollar rises ahead of PCE Index data

NZD/USD loses ground as traders adopt caution ahead of US PCE inflation data due on Friday.
The US Dollar may face challenges as the federal court ruled allowing Trump's tariffs to take effect.
The ANZ–Roy Morgan Consumer Confidence fell to 92.9 in May, down from 98.3 in April.

Akhtar Faruqui FXStreet

NZD/USD halts its two-day winning streak after offering daily gains, trading around 0.5960 during the early European hours on Friday. However, the pair could regain its ground as the US Dollar (USD) may struggle following the US Court of Appeals ruling allowing US President Donald Trump's tariffs to take effect.

A three-judge panel at the Court of International Trade in Manhattan, on Wednesday, condemned Trump’s misuse of the Carter-era International Emergency Economic Powers Act (IEEPA) to justify his international agenda. The federal court said that Trump exceeded his authority in imposing broad import tariffs and declared the executive orders issued on April 2 unlawful.

“US President Donald Trump's administration is weighing on the use of an existing law that includes language allowing for tariffs of up to 15% for 150 days.” “The administration has not made a final decision, and it could wait to impose any plans,” the Wall Street Journal (WSJ) reported.

On the US data side, the US economy contracted as the preliminary Gross Domestic Product Annualized showed a 0.2% decline in the Q1. This contraction was less bad than the expected decline of 0.3%. Personal Consumption Expenditures (PCE) remained consistent at a 3.6% increase quarter-over-quarter in Q1, as expected. Meanwhile, Core PCE rose 3.4% QoQ against the expected 3.5% increase. Furthermore, the US April Personal Consumption Expenditures (PCE) Price Index report will likely be released on Friday.

On the Kiwi side, the ANZ–Roy Morgan Consumer Confidence declined to 92.9 in May, down from 98.3 in April, weakening consumer sentiment. The persistent high inflation expectations continue to weigh on household sentiment. Moreover, the seasonally adjusted Building Permits depreciated by 15.6% month-on-month in April, as compared to the previous increase of 10.7% (revised from 9.6%) in March.

Economic Indicator

Personal Consumption Expenditures - Price Index (MoM)

The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US).. The MoM figure compares prices in the reference month to the previous month. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

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