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  • NZD/USD retraces the latest gains amid a lack of major catalysts.
  • The weekend news surrounding China has been less impulsive to extend the previous run-up.
  • Monthly Chinese PMIs will be the key to watch during the week, trade/political headlines could offer intermediate direction.

NZD/USD clings to 0.6700 amid Monday’s Asian session. The kiwi pair rose to the five-month high on Friday but seems to lack the power to extend the latest rally. Weekend headlines from China have been mixed and hence traders await Beijing’s key Purchasing Managers Index (PMI) data for fresh impulse.

Despite staying ready to adhere to phase-one conditions, China’s warning to the US to stay out of the internal matters indicates a political tension between the world’s top two economies. The same hinders the path for future trade relationships even if the US President Donald Trump cheers the nearness of signing the much-awaited trade deal. Also, news that the dragon nation is mending the loan rate offered a little help to the kiwi despite signaling an increase in business lending.

The quote recently benefitted from the US Dollar’s (USD) broad weakness amid news surrounding the US-China trade relations. However, a lack of momentum during the year-end dull sessions keeps the buyers in check.

Traders will now look forward to China’s official PMI data, up for publishing on Tuesday for fresh direction. The key manufacturing activity gauge crossed 50.00 mark during the latest reading and hence gain more attention. Following that, Thursday’s Caixin Manufacturing PMI will also be watched to confirm the official reading.

Even so, the trading sentiment is less likely to improve during the year-end week. It’s worth mentioning that trade/political headlines and second-tier data from the US could offer intermediate clues.

Technical Analysis

While early-July high surrounding 0.6730 and the July month top around 0.6800 are on the Bulls’ radar, a sustained break of 0.6700 can drag prices to the one-month-old rising support line, near 0.6650 now.