NZ dollar firm, eyes fresh data for direction

* NZ dollar firm, but $0.69 level proving a tough obstacle

* Stock market moves set the tone

* NZ trade data on Thursday, building data on Friday

WELLINGTON, Aug 26 - The New Zealand dollar <NZD=> held firm on Wednesday, in sight of recent 11-month peaks, after volatile Chinese stocks moved higher, though it remained capped ahead of the $0.6900 level.

The Shanghai equity market <.SSEC>, which investors have honed in on as a key barometer of risk in recent weeks, turned higher after early weakness in turn improving sentiment towards higher-yielding currencies.

"The important question near-term is whether or not investors think the global backdrop has improved sufficiently to see the NZ dollar break into fresh ranges," said BNZ Capital Markets strategist Mike Jones.

The kiwi was trading at $0.6866/68 at 0500 GMT from Tuesday's late local trade around $0.6850/60. It traded a relatively tight $0.6830-0.6873 range.

The NZ dollar has been close to pushing through $0.6900 three times in the past 10 days, but has fallen short on each occasion, prompting talk of a major option barrier at that level.

Jones said the kiwi and other high yielders, such as the Aussie dollar <AUD=>, would need further strong data supporting expectations of economic recovery to be able to push higher.

Germany's IFO business sentiment survey and U.S. durable goods and new home sales data are due later on Wednesday and could give investors a steer.

The kiwi was sitting just below four-and-a-half month highs against the neighbouring Aussie dollar <NZDAUD=R> as investors seemed inclined to ignore relative fundamentals, such as Australia's interest rates advantage.

NZ trade data for July is due on Thursday with a Reuters poll showing expectations of a deficit of NZ$150 million for the month and an annual deficit of NZ$2.55 billion. NZ building data and household borrowing data is due on Friday.

The NZ dollar is seen supported at $0.6820 with resistance still around $0.6890, and then $0.6950.

New Zealand government bonds were a shade firmer with the yield on the benchmark NZ 10-year bond <NZ10YT=RR> two basis points lower at 5.72 percent.