US Dollar Struggles Continue, NZ Jobs on Target

The US dollar continued its descent following Friday's non-farm payrolls report. The kiwi was the best performer while fellow commodity currency CAD lagged. Early in Asia-Pacific trading, the unemployment rate rose to 6.4%.

The US dollar had several reasons to rally on Tuesday but ignored them. One was a less dovish comment from one of the biggest doves at the Fed. Chicago Fed president Evans said tapering was 'quite likely' to start this year and dismissed fears about rising mortgage rates. The June JOLTS survey, which measures job openings, also rose to a multi-year high. Most importantly, Ashraf detailed the upbeat trade figures and the positive implications for the dollar.

The dollar was unable to gain any traction on these headlines. Instead, USD/JPY traders focused on falling stock markets and others focused on a signal that tapering could be delayed. Atlanta Fed president Lockhart said curtailing QE is not definite if the economy is 'moping along.'

USD/JPY slid to a one-month low at 97.51 as the S&P 500 declined 0.6%. A report from Nikkei cited  draft copies of government fiscal plans that continued to indicate sales tax hikes.

The New Zealand dollar was slightly weaker after the Q2 employment report showed unemployment at 6.4% compared to 6.3% expected. The rate of jobs growth matched expectations but the participation rate ticked higher so the RBNZ is unlikely to stir. One area that could lead them to back away from rate hikes is a 1.7% rise in private sector wages compared to 1.8% expected.

Later, the highlight is Australian home loans for June at 0130 GMT.  AUD/USD has remained buoyant since the RBA decision and a good data point could spark a squeeze above 0.9000. Expectations are for a 2.0% m/m rise. The BOJ also starts its two-day meeting.