NZD/USD was trading in negative territory around 0.6065 in early Asian trading on Friday. The New Zealand dollar (NZD) weakened against the U.S. dollar (USD) as losses in the stock market dampened risk sentiment. The University of Michigan consumer confidence index will be in focus later on Friday.

Cautious sentiment and rising geopolitical tensions in the Middle East exerted some selling pressure on risk assets such as the NZD. The Wall Street Journal (WSJ) reported late Thursday, citing U.S. and Israeli officials, that Israel is ready to launch an attack on Iran in the coming days if Tehran rejects a U.S. proposal to limit its nuclear program.

After two days of negotiations, the United States (US) and China reached a preliminary agreement on how to implement the consensus reached by the two sides in Geneva. The agreement suspends U.S. President Donald Trump's 145% tariffs on China and China's 125% tariffs on U.S. exports, reducing them to 30% and 10%, respectively. Positive developments surrounding the world's two largest economies could support the Chinese proxy NZD, as China is New Zealand's main trading partner.

The weakness of the U.S. dollar after the U.S. inflation data came in below expectations could also help limit the pair's losses. The U.S. Bureau of Labor Statistics reported on Thursday that the Producer Price Index (PPI) rose 0.1% month-on-month in May, compared with a previous value of a 0.2% decline (revised from -0.5%), which was lower than the expected 0.2% increase. At the same time, the core PPI excluding food and energy rose 0.1% month-on-month in May, compared with a previous value of -0.2% (revised from -0.4%), which was lower than the market consensus of 0.3%.