NZD/USD pulls away from 12-week highs, clings to modest gains above 0.6200
- NZD/USD started the new week on a strong footing.
- Upbeat PMI data from China helped NZD gather strength.
- US Dollar Index falls for the fifth straight day ahead of PMI data.
The NZD/USD pair gained more than 100 pips last week and stretched higher during the Asian session on Monday. After touching its highest level in 12 weeks at 0.6262, however, the pair has gone into a consolidation phase and was last seen trading at 0.6228, where it was still up 0.4% on the day.
Earlier in the day, the data from China showed that the economic activity in the manufacturing sector expanded in May and helped the China-proxy NZD find demand. The Caixin Manufacturing PMI recovered to 50.6 in May and the NBS Manufacturing PMI, which was released on Sunday, came in at 50.6.
Eyes on US data
Meanwhile, easing worries over US-China tensions escalating further weighed on the greenback at the start of the week. After closing the last four trading days in the negative territory, the US Dollar Index (DXY) edged lower and allowed NZD/USD's bullish momentum to remain intact. As of writing, the DXY was down 0.15% on the day at 98.16.
In the second half of the day, the Manufacturing PMI data released by the ISM and the IHS Markit will be looked upon for fresh impetus. Furthermore, investors will keep a close eye on Wall Street's performance. If risk-aversion starts to dominate the financial markets amid mass protests and riots in the US, the USD could start gathering strength as a safe-haven.
Technical levels to watch for