• NZD/USD cleared part of it previous day’s losses and climbed to 0.6130, 0.90% up on the day.
• Core PCE came in at 4.6% YoY vs the 4.7% expected in May.
• US bond yields retreated, weakening the US Dollar.

On Friday, following the release of soft Personal Consumption Expenditures (PCE) data from the US, the NZD/USD pair staged a recovery, erasing a portion of its previous day's losses. The pair advanced to 0.6120, marking an increase of 0.80% for the day. Following the data, US bond yields retreated, weakening the US Dollar, but remained in positive territory.

US reported soft PCE figures.

On Friday, the US Bureau of Economic Analysis reported that the Core PCE, the Federal Reserve’s (Fed) preferred gauge of inflation from May from the US, slightly decelerated. The figure declined to 4.6% YoY from its previous 4.7% reading, failing to meet the expectations of 4.7% and tallying a 0.3% MoM increase vs the 0.4% expected.

As a reaction, US bond yields retreated from daily highs as investors seemed to be betting on a less aggressive Fed. In that sense, the 2-year bond yield peaked at 4.93%, its highest level since March 9, retreating to 4.85%, while the 5 and 10-year rates fell to 4.13% and 3.83%.

However, more evidence of inflation deceleration must be seen for the Fed to pivot from its hawkish stance. As for now, according to the CME FedWatch tool market is almost completely discounting a 25 basis points (bps) hike on July 31 and still trying to figure out when the second hike Jerome Powell hinted will come