US equities gained through the course of yesterday as hopes of diminishing trade tensions between the US and China dominated sentiment. Overnight however, US 10y Treasury yields climbed above the psychologically import level of 3%, prompting the USD to rally.
Focus is on UK unemployment data today, where Barclays Research expects a slight uptick in unemployment. Given the BoE’s strong data-dependency, sterling is sensitive to any such economic releases. Nonetheless, the bar for any future hikes is currently high and would require uninterrupted improvement in the labor market.
Our traders currently see GBPUSD support at 1.3450 with resistance at 1.3625. EURGBP short-term support comes in at 0.8785, while resistance lies in the 0.8840-75 area.
The RBA minutes, released overnight, seem a little more cautious than the previous month's discussion, where the RBA kept rates on hold at the May 2018 meeting. The committee highlighted some new risks around tightening bank lending standards and economic fundamentals, which prompted AUDUSD to fall overnight.
Argentinean assets and ARS continued to sell off yesterday. ARS fell by a further 7% despite central bank intervention, on the back of a large current account deficit and a decline in portfolio flows. The government has requested a high-access stand-by IMF agreement and Barclays Research expects “a favourable conclusion in the coming weeks”.