05:57 AM EDT, 06/13/2024 (MT Newswires) -- The New Zealand dollar struggled for traction against other major currencies in early European trade on Thursday after being hobbled by a recovering US dollar and more data suggesting ongoing weakness in consumer spending.

NZD/USD was quoted 0.12% lower around 0.6178 after falling from highs around 0.6220 late on Wednesday when a hawkish US Federal Reserve dot-plot revision drove a broad recovery of the US dollar from yesterday's lows.

The Kiwi dollar correction was encouraged late on Wednesday when Statistics New Zealand said the volume of electronic card transactions declined 1.1% MoM and 1.6% YoY in May, making a fifth-consecutive decline.

Local economists at ASB Bank said this was further evidence of consumers pulling back spending owing to higher living costs, including elevated interest rates, and warned that consumer spending is likely to remain weak through year-end.

The data has no immediate implication for interest rates, however, as the Reserve Bank of New Zealand made clear in May that it's still biased toward raising rates while its latest forecasts indicated that rates are unlikely to be cut before Q3 2025.

The Kiwi had rallied from 0.6140 to 0.6220 on Wednesday when US inflation stalled in MoM terms for May but it later pared those gains when the Fed cut the number of rate cuts projected for this year to just one in its latest dot-plot.

The Fed's dot plot chart - updated every three months - records each Fed official's projection for the central bank's key short-term interest rate.

The Fed acknowledged that "modest further progress" returning inflation to the 2% target has been made in recent months but reiterated that it doesn't expect to cut interest rates until it gains greater confidence in the return to the target.