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NY Open: Carney 'The Cable Guy'

Summary:  It's been another rock-and-roll day for sterling on the Brexit roller-coaster. And with talks taking place here there and everywhere, it's a safe bet there'll be more days like this.


Bank of England governor Mark Carney put Cable through its paces today. GBPUSD opened at 1.2900 and sank to 1.2856 before reversing course and soaring to 1.2990. Carney had a lot to do with both moves. He left interest rates unchanged, surprising no one. The statement was somewhat dovish saying UK growth slowed, inflation has dropped back close to the 2% target and warning that future rate increases would be gradual and limited, and GBPUSD tanked.

The fall was brief. 

The governor tempered the dovish bias by reminding markets that “fundamentals of the UK economy are sound. The financial sector is resilient. corporate balance sheets are strong, and the labour market is tight.” Sterling soared, and it got an added boost from Brexit headlines. Prime Minister Theresa May met European Commission President Jean-Claude Juncker. EU officials have been nearly unanimous with their comments that the original May/EU Brexit agreement could not be renegotiated, yet there's a lot of talk going on. In addition to Juncker, May is talking to European Parliament President Antonio Tajani and with European Council President Donald Tusk. Furthermore, May and Juncker plan to meet for more discussions.

The US dollar opened in New York with small gains against everything except the Japanese yen. USDCHF and AUDUSD were unchanged. Those gains have been pared as of 14:00 GMT. USDCAD extended its overnight gains this morning on the back of bullish technicals and lower WTI oil prices. The overnight break above 1.3220 targets a retest of the 2019 peak of 1.3365, although resistance at 1.3290 and 1.3320 could be tough.

Wall Street is in the red. Growth downgrades in Europe and the UK and a comment by Dallas Fed President saying that the US was not an island encouraged sellers. Twitter (TWTR: Nasdaq) is getting spanked (down 10.13% as of 14:00 GMT) as traders believe a slightly downgraded outlook and the decision to scrap the monthly user metric trumps better than expected quarterly earnings.
GBPUSD , five minute. Source: Saxo Bank

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