NZD/USD pulls away from multi-week highs, trades below 0.6850 ahead of trade data

• Concerns over economic slowdown in China hurts NZD.
• US Dollar Index rebounds modestly from daily lows.
• Coming up: Trade balance data from New Zealand.

After rising to a fresh 5-week high near 0.6870 earlier in the day, the NZD/USD pair struggled to preserve its daily gains and fell into the negative territory in the late NA session. As of writing, the pair was down 0.25% on the day at 0.6833.

With the greenback struggling to find demand ahead of this week’s FOMC meeting, at which Chairman Powell is expected to adopt a dovish stance and possibly announce an early end to the balance sheet reduction scheme, the pair started the week on a positive note and climbed higher. However, the US Dollar Index started to retrace its daily drop in the last couple of hours to weigh on the pair. At the moment, the DXY is down 0.07% on the day at 95.75.

On the other hand, large corporations, namely Caterpillar and Nvidia, in the U.S. reporting disappointing performances in the last quarter of the year due to weak demand from China weighed on currencies sensitive to China’s economic health such as the NZD and the AUD on Monday.

At 22:45 GMT, the Statistics New Zealand will publish the trade balance data. On a monthly basis, markets expect the country to post a trade surplus of $225 million after recording a deficit of $861 million in November. If the trade surplus falls short of the analysts’ estimates, the kiwi could come under a renewed selling pressure during the Asian trading hours.

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