Dollar Downfall Continues, Kiwi Jobs Next

If the dollar reversal after non-farm payrolls was the warning shot, Tuesday was the artillery assault as the buck fell hard. AUD made the largest gains against the dollar but the weakness was broad based. New Zealand employment and the BOJ minutes are next.

Several events conspired to undercut the dollar with memories of the inability of USD to rally after payrolls fresh in the minds of traders. The first moves were pound and euro strength after upbeat data. They neared the key 1.70 and 1.40 levels, respectively and chased out dollar bulls.

The dollar weakness began to cascade to other pairs and a moderately soft trade report was enough to push it over the ledge. The March deficit was $40.38B compared to $40.30B expected but the composition of imports and exports led to more Q1 growth cuts, some to as low as -0.6%.

One asset that failed to take advantage of dollar weakness was gold, which declined $2 Tuesday. Bonds are also arguing for safe havens but gold hasn't been listening. That could prove to be an early warning sign.

An underappreciated bullish headline for the euro was a German government deal with the construction union that represents 760K workers. They will get a pay hike of 5.7% between now and June 2015 plus an additional 0.7% to workers in eastern Germany.

Those agreements often set the standard for workers elsewhere and will keep ECB disinflation fears at bay. Another good sign for the ECB is the periphery bond market where Spanish and Italian yields fell to record lows, putting a nail in the eurozone sovereign crisis coffin.

Japanese markets re-open after Golden Week holidays and that should keep things moving in Asia. If not Q1 New Zealand employment is at 2245 GMT. That's followed by the BOJ minutes at 2350 GMT, Aussie retail sales at 0130 GMT and the China HSBC services PMI at 0145 GMT.

The market is highly sensitive to economic data at the moment and all those releases are notable.