Anthony Murphy, a dealer at OMF, says when the kiwi reached above the 68 US cent mark, it triggered selling to unwind some speculative positions.
However, improving sentiment limited the downside and the currency traded in a tight 67.70 US cents to 68.05 cents range throughout the day.
The data from China - New Zealand's biggest trading partner - showed producer prices rose 0.9 per cent in December, the slowest pace of growth since September 2016. Economists had expected an increase of 1.6 per cent.
China's consumer inflation for the month rose 1.9 per cent, below the 2.1 per cent forecast.
The kiwi fell to 4.6052 Chinese yuan from 4.6313.
Financial markets are watching for signs that the world's second-largest economy is being hurt by its trade dispute with the US.
However, positive indications from trade talks between officials of the two countries in Beijing earlier this week, which were extended by a day from the scheduled two days, have raised hopes that they're making progress towards a resolution.
China's Commerce Ministry said the talks were extensive and had established a foundation for resolving both countries' concerns.
As well, the minutes from the US Federal Reserve's last Federal Open Market Committee meeting, released early today New Zealand time, backed up comments chair Jerome Powell made in a speech last Friday that the Fed can be "patient" about raising interest rates further.
All in all, these developments have unwound the flight to safety in the US dollar seen last week. In particular, the market is now betting the Fed's ratcheting up of its benchmark interest rate has halted for now.
Four hikes last year, including the one at the last meeting, had been driving the US dollar higher. Still, the Fed did have another two rate hikes pencilled in for this year, down from the three it had foreshadowed before its last meeting.
The New Zealand dollar eased to 94.41 Australian cents from 94.68 cents, 73.17 yen from 73.48, to 53.03 British pence from 53.12, and to 58.65 euro from 58.86.
The New Zealand two-year swap rate ended the session at 1.9139 per cent from 1.9350 yesterday; the 10-year rate fell to 2.6100 per cent from 2.6550.
