Dollar Dives, Wheeler Talks Down NZD

The RBNZ held rates as expected but negative talk on the kiwi and a cut to the GDP forecast weighed. The US dollar suffered once again Wednesday as American traders sold. The Australian dollar now comes into focus with the employment report coming up. The 2nd GBPUSD long hit all targets, while both EURUSD longs are in progress. These trades are in the latest Premium Insights.

Early in Asia-Pacific trading, the RBNZ left its main rate unchanged at 2.50% as economists had unanimously expected. Wheeler said the NZD 'remains overvalued and continues to be a headwind for the tradables sector' and cut the 2014 growth forecast to 3.0% from 3.3%.

Wheeler also repeated he's prepared to intervene in the currency market. The rhetoric is little changed from recent meeting but we warned yesterday about how jawboning is more powerful when it has market momentum behind it. NZD/USD fell a half-cent immediately after the decision to 0.7933.

The main theme earlier in the day was US dollar selling. USD/JPY fell more than 100 pips as the beginning of US trading set of a wave of selling. The pair touched as low as 0.9514 but bids ahead of the big figure supported the pair.

A technical line under fine is the 200-day moving average in GBP/USD. Cable has been below the mark (which sits at 1.5707) since February. It came within a few pips of it on Wednesday but after 8 days of gains in the past 11, it may signal the need for a break.

The focus now shifts to the Australian dollar, which staged a mild rebound Wednesday after weeks of relentless selling. The high was 0.9564 in Asia but it has drifted 100 pips lower. Today's employment report is at 0130 GMT and is expected to show 10K job losses after a surprise 50K gain in April. The unemployment rate is expected to tick to 5.6% from 5.5%.

The Aussie jobs report has swung between huge losses and gains over the past several months and the market is likely braced for disappointment. In that case, the rally following a good number would be greater than the decline following a miss.

Rather than AUD/USD, keep an eye on AUD/JPY which is trading near 90.70. The 90.00 has been particularly solid in the last two days and could be a pivotal level.