The farm payroll data will be released in the US tomorrow and if employment levels have risen, that would be a catalyst for the Fed to start reducing quantitative easing (QE), he said.
''This talk seems to have been the excuse investors are looking for as a reason to take profits. The improving US economic outlook has seen the US financial and industrial shares benefit in May, while the utilities, telecoms and consumer staples sectors have all posted losses as investors sold yield in favour of growth.''
New Zealand, Australian and Asian share values took a beating yesterday as US investors started selling out of equities to repatriate their money, Mr Timms said.
Correspondingly, the New Zealand and Australian dollars fell as investors sold shares and bought US Treasury bonds after US reports raised concerns about the pace of the recovery in the world's largest economy.
The kiwi fell to a nine-month low and the Australian dollar fell to its lowest level since September 2010.
Asked if the fall in the New Zealand dollar had anything to do with Reserve Bank intervention in the currency market, Mr Timms said the latest developments were all to do with the US activity.
''The Reserve Bank would be whistling into the wind on the amount it is spending. We are completely at the whim of what is happening overseas.
''If something is going astray, if there is risk back on the table, you see money flooding back to the US as people take their money back home,'' he said.
It was a mixed message for investors as a report from the ADP Research Institute said US companies added fewer workers in May than expected and the Fed said in its Beige Book business survey the economy expanded at a ''modest to moderate'' pace.
HiFX trader Michael Johnson said people were concerned about the strength of the US economy and there was generalised risk aversion.
''People are getting a bit nervous out there and the kiwi is coming off as a consequence. We think we can go further.''
HiFX expected the kiwi to drop as low as US75c this year, possibly in the next two months, he said.
Mr Timms said the jobs report out tomorrow would be closely watched as the Fed had clearly stated that for its policy settings to change, tangible and sustainable improvements must be seen in the labour markets.
Economists were expecting 160,000 jobs to be added in May, a slight fall on last month's 165,000. Unemployment was expected to remain steady at 7.5%.
''Some strategists are suggesting that markets could be in for a disappointment if they think this will be good enough for the Fed to begin tapering. The central bank has previously said that its definition of sustained labour market strength is monthly gains of 200,000 for a reasonable period of time,'' Mr Timms said.
The Fed meets next on June 18 and 19. The payroll data was the last major piece of information before then, Mr Timms said.
Locally, Mr Timms could see no immediate catalyst for change in the markets as no company or economic news was due for a few days.
