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Kathy Lien

Kathy Lien

Kathy Lien is an Internationally Published Author and Managing Director of BK Asset Management. Her trading books include the following: 1) For beginners, “The Little Book of Currency Trading (2010, Wiley).” 2) THIRD edition of the highly acclaimed, internationally published “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2015, Wiley).” 3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley) 4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)

Articles by Kathy Lien

5 Reasons Why Traders are Selling US Dollars

2 days ago

5 Reasons Why Traders are Selling US Dollars
Daily FX Market Roundup July 18, 2019
Investors are selling US dollars and we’d like to explain why. All of the major currencies traded higher against the greenback on Thursday with the exception of the Canadian dollars. There are no fewer than 5 reasons for the greenback’s weakness over the last 24 hours:
5 Reasons Why Traders are Selling US Dollars
1. Federal Reserve poised to cut rates this month
2. Iran seized a foreign tanker
3. US Treasury Secretary Mnuchin teases possible change in Dollar policy
4. Earnings disappointments drive stocks lower
5. USD/JPY closes in on 1 month lows
The backdrop should be one of US dollar weakness because the Federal Reserve is poised to lower interest rates this month. Although they may only grant us

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Dollar Slips Back, NZD Hits 3 Month Highs

2 days ago

Dollar Slips Back, NZD Hits 3 Month Highs
Daily FX Market Roundup July 17, 2019
The US dollar traded lower against all of the major currencies on Wednesday as Treasury yields resumed their slide. The New Zealand benefitted the most from the decline, rising to its strongest level in 3 months. Sterling, which had fallen to a year to date low versus the greenback during the European session recovered steadily into the NY close ending the day in positive territory. Housing starts and building permits dropped more than expected but the sell-off in the dollar really didn’t begin until the NY equity market open. Stocks started to fall and along followeds the US dollar. The Federal Reserve’s Beige Book didn’t hurt as the Fed districts reported a modest expansion with little change from the

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FX: Powell vs. Bank of Canada vs. Fed Minutes

10 days ago

FX: Powell vs. Bank of Canada vs. Fed Minutes
Daily FX Market Roundup July 9, 2019
In the next 24 hours, there are 3 major event risks that could change the course for currencies. The most significant will be Federal Reserve Chairman Powell’s testimony on the economy and monetary policy and then the Bank of Canada’s monetary policy announcement. Both of the events could amount to nothing but there’s also a high possibility of market moving new revelations.
For the US dollar, everyone is looking at Fed Chairman Powell’s testimony for justification for the currency’s latest rally. The jobs report was better than expected but is it good enough to tip the scales for the Fed? Could they consider keeping rates unchanged this month or deliver no more than an insurance cut?
At their

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Forex: This is the #1 Event Risk This Week

11 days ago

Forex: This is the #1 Event Risk This Week
Daily FX Market Roundup July 8, 2019
US dollar bulls remain in control with the greenback extending its gains against all of the major currencies. Friday’s non-farm payrolls report sparked a broad based recovery in the greenback. With no US economic reports scheduled for release Monday and Tuesday, the dollar held onto its gains as investors wait for its next catalyst, Federal Reserve Chairman Powell’s semi-annual testimony on the economy and monetary policy. There’s no question that this is the most important event risk of the week. It could determine the market’s appetite for US dollars not just for the next week but for the rest of the month ahead of the July 31st FOMC meeting. Before the jobs report, Fed fund futures were pricing in 75%

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Dollar Bulls Regain Control After Non-Farm Payrolls

14 days ago

Dollar Bulls Regain Control After Non-Farm Payrolls
Daily FX Market Roundup July 5, 2019
The US dollar traded sharply higher against all of the major currencies on the back of Friday’s non-farm payrolls report. A total of 224K jobs were created in the month of June, significantly better than the 160K forecast. Frankly, we are surprised by the sustainability and magnitude of the dollar’s move because the rest of the labor market report was underwhelming. Last month’s weak 75K print was revised lower and not higher, the unemployment rate increased and most importantly wage growth held steady at 0.2% instead of rising to 0.3% like economists anticipated. However the broad based rally in the dollar tells us that many concerns were eased by the June jobs report as investors viewed the

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FX Traders – Here’s Our Guide on Trading July Non-Farm Payrolls

17 days ago

FX Traders – Here’s Our Guide on Trading July Non-Farm Payrolls
Daily FX Market Roundup July 3, 2019
The U.S. non-farm payrolls report is always a big mover for the U.S. dollar and all of the major currencies but this month’s report could be more market moving than usual. First, participation is lower with many U.S. traders off for the July 4th holiday weekend. This is the most popular weekend for summer vacations and trading desks are generally staffed with junior traders who are unlikely to take major positions. However this NFP report is also a very important one because last month, the Federal Reserve said they are close to cutting interest rates but how quickly they move depends on data. In that case, there’s no single economic report as important as the jobs report. If job

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Dollar Bulls Retreat, Euro Gets All the Action

17 days ago

Dollar Bulls Retreat, Euro Gets All the Action
Daily FX Market Roundup July 2, 2019
That was quick! After rising strongly on Monday, the U.S. dollar traded lower against all of the major currencies as G20 optimism gave way to fresh uncertainties. USD/JPY, U.S. stocks and Treasury yields turned lower after Russian President Putin unexpectedly pulled out of a scheduled event to meet with his defense minister minutes after U.S. Vice President Pence abruptly returned to D.C. Nothing has been revealed but there are reports that this could be related to a nuclear sub accident. With a whole gamut of options running through everyone’s heads, the first inclination was to sell but remember, the dollar was struggling to extend its post G20 gains before these headlines broke. The G20 Summit

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FX: RBA Preview, G20, OPEC

18 days ago

FX: RBA Preview, G20, OPEC
Daily FX Market Roundup July 1, 2019
The G20 summit ended with a trade truce between the US and China. President Trump and President Xi agreed to restart talks with Trump promising to hold back additional tariffs and allow US companies to sell their equipment to Huawei while discussions are underway. In return China agreed to resume purchases of American goods and buy a “tremendous amount” of American food and agricultural products. The US dollar soared in response but the sell-off in the euro, Australian and New Zealand dollars is a sign that the broader market is not convinced that it will be blue skies from here.
The problem was that a trade truce is not the same as a trade deal. Until tariffs on China are reduced or eliminated the world’s second

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FX Flows Fueled by G20 Optimism

21 days ago

FX Flows Fueled by G20 Optimism
Daily FX Market Roundup June 28, 2019
All of the major currencies either held onto or extended their gains on Friday on trade talk optimism. President Trump’s sit down with President Xi is on Saturday and contrary to our expectations for profit taking, the bulls have held onto their positions with the hope of a positive resolution. The general belief is that it won’t take much for Trump to agree to delay further tariffs on China and by the same token it doesn’t take much to satisfy the market. As long as the meeting does not result in trade tensions escalating further, we could see a relief rally in currencies. We expect President Trump and President Xi to agree to restart trade talks but given Trump’s general unpredictability, even if tariffs are

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G20 & Quarter End Means Lively Friday FX Trade

22 days ago

G20 & Quarter End Means Lively Friday FX Trade
Daily FX Market Roundup June 27, 2019
The highly anticipated G20 meeting kicks off tomorrow and between heightened uncertainty over the weekend and month/quarter-end, Friday should be a lively day for the forex market. US stocks hit record highs in the second quarter and while the greenback tumbled in the month of June, it experienced strong gains in March and April. When investors and portfolio managers rebalance their portfolios at the end of the month and quarter, the sharp rally in U.S. stocks will prompt managers to sell dollars to bring their portfolios back into balance.
This flow could be compounded by pre-weekend profit taking because the big meeting between President Trump and President Xi will be on Saturday. Trump and

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FX Traders Hold Out Hope Even if US-China Deal “Was” 90% Done

24 days ago

FX Traders Hold Out Hope Even if US-China Deal “Was” 90% Done
Daily FX Market Roundup June 26, 2019
With less than 48 hours to go before the beginning of the G20 Summit in Osaka Japan, the focus is shifting back to U.S.-China trade relations. This morning during the early European trading session, USD/JPY shot higher on reports that a trade deal between the U.S. and China is 90% done. Unfortunately the interview with U.S. Treasury Secretary Mnuchin was misquoted and instead of saying that it is 90% done, he actually said they “were about 90% of the way” there. In this case, tenses make all the difference because a deal that is close to being done is very different from an agreement that was almost done and abandoned near the end.
Regardless, the dollar gave back only a small

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Will RBNZ Halt NZD Rally?

24 days ago

Will RBNZ Halt NZD Rally?
Daily FX Market Roundup June 25, 2019
Today’s rally marked the sixth consecutive day of strength for the New Zealand dollar. In the short span of a few days, NZD/USD has risen from a low of .6490 to a high above .6650. Broad based US dollar weakness played a big role in the move but the New Zealand dollar has been one of the strongest currencies because its gains were validated by better than expected economic data. Last night, we learned that while the country’s trade surplus narrowed, the balance fell less than expected and more importantly, exports and imports increased in the month of May. In fact exports hit a record high of NZ$5.8B on the back of strong demand for milk powder and infant formula. Milk powder exports rose 32% while food preparations,

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FX: Here’s 5 Things to Watch This Week

25 days ago

FX: Here are the 5 Things to Watch This Week
Daily FX Market Roundup June 24, 2019
It may be a new trading week but last week’s themes have carried over to Monday’s trade as the greenback extended its losses against all most of the major currencies. The Australian and New Zealand dollars were the biggest gainers after RBA Governor Lowe openly mused about the effectiveness of more rate cuts if “everyone is easing.” This is an awkward comment because while its true that contemporaneous reduction in rates could result in exchange rate parity, lower borrowing costs goes a long way in helping businesses and consumers domestically. Regardless, the market bid AUD and NZD higher as they interpreted this to mean that the central bank could forgo a rate cut next week. The RBNZ meets on

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Is EURO’s Rally Sustainable?

28 days ago

Is EURO’s Rally Sustainable?
Daily FX Market Roundup June 21, 2019
Investors continued to dump the dollar, driving all of the major currencies higher in the process. Euro led the gains, rising to its strongest level in more than 2 months. Better than expected Eurozone PMI numbers created hope that the ECB could delay easing. In the forex market, currencies are driven by the latest turn of events and while the ECB talked rate cuts for the first time earlier this month, the most recent shift came from the Federal Reserve and the market was positioned the wrong way. The euro was deeply oversold and while some investors expected the Fed to be dovish, no one expected 8 members to flip their views and start favoring a rate cut this year. Thanks to the Fed, the short-term pullback in the

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This is How Low USDJPY Can Go

29 days ago

This is How Low USDJPY Can Go
Daily FX Market Roundup June 20, 2019
The last 24 hours has been brutal for the US dollar. The greenback dropped to its lowest level since the beginning of the year against currencies like the Japanese Yen and Swiss Franc. While it took the participation of European traders to break the dollar down, it was only a matter of time before that would have happened after the Federal Reserve revealed how close they are to easing. There’s widespread support for not one but possibly two rate cuts this year. Considering that a large subset of traders were skeptical of even one quarter point cut, the Fed’s dramatic shift in forward guidance should have led to a dramatic reaction in the US dollar. It took some time but the bears finally came out in force today.

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Fed Rate Cuts are Coming, So Why Didn’t the Dollar Crash?

June 19, 2019

Fed Rate Cuts are Coming, So Why Didn’t the Dollar Crash?
Daily FX Market Roundup June 19, 2019
Regardless of how the US dollar reacted to the Federal Reserve’s monetary policy announcement, the main takeaway is that lower interests are coming. Instead of talking about the possibility of rate cuts, the conversation has shifted completely to the speed of easing. Back in March 2 members favored a rate hike in 2019 and 11 favored no change. Now, only 1 member favors a rate hike while 8 see rate cuts in 2019. The worst part for the dollar is that 7 of those 8 members see the need for 2 rounds of easing. St Louis Fed President Bullard wanted interest rates to be lowered by 25bp today.
So we did not even need to hear from Federal Chairman Powell to understand how dovish the central bank

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Will FOMC send EURUSD towards 1.10?

June 18, 2019

Will FOMC send EURUSD towards 1.10?
Daily FX Market Roundup June 18, 2019
The June Federal Reserve meeting is the most important event of the month. Central bank rate decisions are always significant but updated economic projections and dot plot forecasts will also be released. Fed Chairman Powell will hold a press conference where reporters will undoubtedly pressure him for details about his recent comments. Earlier this month, Powell said the economy is growing but given trade developments, they will “act as appropriate to sustain expansion.” While he never used the words “rate cut,” investors rushed to price in easing. Fed fund futures are calling for a 95% chance of a quarter point cut in September. Back in March, the dot plot forecast dropped from two to zero rate hikes

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EUR, NZD, AUD Crash Lower After US Retail Sales

June 14, 2019

EUR, NZD, AUD Crash Lower After US Retail Sales
Daily FX Market Roundup June 14, 2019
This has been a great week for the US dollar and the US retail sales report was the icing on the cake. The greenback soared against all of the major currencies after Friday’s release showed consumer spending rising 0.5% in the month of May. This was slightly lower than expected but excluding gas and auto sales, retail sales beat expectations. Yet the main reason why the dollar took flight was because of revisions. Rather than falling -0.2% retail sales increased by 0.3% in April. This means that consumer appetite in the US is stronger than what was previously reported. Going into the report, investors were bracing for the worst but they were pleasantly surprised by the robustness of spending over

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FX: How US Retail Sales Could Rock the Market

June 13, 2019

FX: How US Retail Sales Could Rock the Market
Daily FX Market Roundup June 13, 2019
Friday’s US retail sales report is one of the most important pieces of data on this week’s economic calendar. The Federal Reserve meets next week and this number will play a crucial role in shaping expectations for the central bank’s forward guidance. Economists are looking for a recovery in spending but there are plenty of reasons why the data could miss. First and foremost, labor market gains are easing according to last month’s jobs report. Wage growth is also slowing, gas prices are lower and the 6% decline in stocks in May are all reasons why consumers would have been reluctant to spend last month. Despite the record breaking moves in stocks and the low unemployment rate, Americans never felt

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EUR – How Much will EZ Industrial Production Hurt?

June 12, 2019

EUR – How Much will EZ Industrial Production Hurt?
Daily FX Market Roundup June 12, 2019
The Eurozone’s industrial production report is typically not a big market mover for the euro but the currency has been trading in a tight range for the past 3 days and its inability to extend higher could make Thursday’s report more market moving than usual. Given the sharp drop in German industrial production, Eurozone industrial production will not only fall for the third month in a row but the decline could be larger than anticipated. The global economy is slowing and it is no secret that the European Central Bank is worried. Industrial production may be a minor report but it is the most significant piece of EZ data this week and it’s a leading indicator for next week’s PMIs. If industrial

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3 Reasons Why USDJPY is Headed Lower

June 10, 2019

3 Reasons Why USDJPY is Headed Lower
Daily FX Market Roundup June 10, 2019
We kicked off the new week with renewed demand for US assets. The S&P 500 extended last week’s gains as the greenback traded higher against all of the major currencies. By sparing Mexico punitive tariffs and US corporations, a major threat to earnings, the immigration agreement between the US and Mexico provided a big boost for risk appetite. The US dollar benefitted the most because next to Mexico, the threat to the US economy or corporate earnings was the greatest risk. While this deal eases concerns about the US economy’s second half performance, we believe that the dollar will fall further in the coming days and weeks.
#1 – First and foremost, Mexico’s foreign minister said on Monday that the “fully

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EUR: 3 Things to Expect from ECB

June 5, 2019

EUR: 3 Things to Expect from ECB
Daily FX Market Roundup June 5, 2019
Tomorrow’ European Central Bank monetary policy announcement will be a big one. EUR/USD rallied for 4 days straight this week but the sellers are returning ahead of the rate decision. The 3 things to expect from the ECB this month include:
1. Details on their new Targeted Long Term Refinancing Operation
2. Updated economic projections
3. New Forward Guidance
Back in March, the ECB announced a series of new loans that would provide additional stimulus to the Eurozone economy. They said the details of this program known as TLTRO-III would be provided in June. Now that the time has rolled around, EUR/USD traders are eager to see how generous the program will be, how it will be priced and whether the interest rate be

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RBA Prepares to Cut but for AUD, Guidance is Key

June 3, 2019

RBA Prepares to Cut but for AUD, Guidance is Key
Daily FX Market Roundup June 3, 2019
This is a big week for the Australian dollar. The calendar is full market moving events such as retail sales, PMIs, the trade balance and first quarter GDP. All of these reports are important but the biggest driver of Australian dollar flows will be tonight’s Reserve Bank of Australia monetary policy announcement. The RBA is widely expected to lower interest rates to a record low of 1.25% and follow with another round of easing in July or August. The market is pricing in a 93% chance of an interest rate cut and the only question is how eager they will be to move again. Sino-US relations have deteriorated rapidly but domestic data hasn’t been terrible.
Taking a look at the table below, consumer

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FX – The Sting of Protectionism

May 31, 2019

FX – The Sting of Protectionism
Daily FX Market Roundup May 31, 2019
Currency and equity traders felt the sting of protectionism on Friday as China and the US take fresh steps to restrict trade. Overnight, the Trump Administration announced plans to impose 5% tariff on all Mexican imports starting June 10th and the rate will “gradually increase” “if the crisis” of undocumented migrants persists. Rates would rise to 10% on July 1st if meaningful changes aren’t made and increase an additional 5% each month for 3 months. Trump is resorting to a tariff wall instead of a border wall but politics aside, this broad tariff will hurt not only the Mexican economy but American consumers and businesses.
Two things can be assured in a trade war – slower growth and higher prices for all parties

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Stocks Break Support, More Losses Ahead for FX?

May 29, 2019

Stocks Break Support, More Losses Ahead for FX?
Daily FX Market Roundup May 29, 2019
US equities sold off sharply today, breaking through some important support levels and this sell-off drove all of the major currencies lower. The Dow Jones Industrial Average hit a fresh 3-month low after breaking below the 100 and 200-day simple moving averages. The S&P500 slipped underneath 2800. The New Zealand dollar, one of the most sensitive high beta currencies led the decline despite stronger business confidence and ANZ activity index. With the world’s two largest economies engaged in an intensifying trade war, investors are worried that the global economy will be hit hard by a simultaneous slowdown in the US and China. After walking away from trade talks, China’s biggest state owned

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Is Fourth Time the Charm for USD/CAD? Bank of Canada – What to Expect

May 28, 2019

Is Fourth Time the Charm for USD/CAD? Bank of Canada – What to Expect
Daily FX Market Roundup May 28, 2019
Don’t underestimate the power of persistence. Three times this month USD/CAD tested but failed to close above 1.35 and including the move in April, there have been four failures. Clearly this is important resistance for the pair and with the right catalyst 1.35 will break easily. Despite unambiguously positive Canadian data, USD/CAD has been in an uptrend for the last 6 weeks and on the eve of the Bank of Canada’s monetary policy announcement investors are positioning for a cautious outlook. If they are right and the central bank ignores the improvements in the labor market and retail sales, the fourth time could be the charm for USD/CAD this month.
According to recent

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Near Term Correction in the US Dollar?

May 24, 2019

Near Term Correction in the US Dollar?
Daily FX Market Roundup May 24, 2019
The US dollar hit fresh multi-month highs versus the euro, sterling, Australian and New Zealand dollars this past week, but the greenback actually ended the week lower against most of the major currencies. This reversal has many traders wondering if there could be a steeper near term correction in the US dollar. Fundamentally, the US economy is performing better than its peers and slower global growth will hurt the economy less than the Eurozone, Australia or New Zealand. However, even though the FOMC minutes were upbeat, the cracks are beginning to show according to the latest economic reports as home sales and durable goods orders decline. There’s very little market moving US data next week but the ones

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What Triggered the V-Shaped Recovery in EURO?

May 23, 2019

What Triggered the V-Shaped Recovery in EURO?
Daily FX Market Roundup May 23, 2019
For the lack of major US economic reports, it was a very active day in the forex market. The greenback, which traded well against euro, Australian dollar and other currencies prior to the NY open u-turned and ended the day lower against all of the major currencies. USD/JPY was hit the hardest by trade war fears, risk aversion and weaker new home sales. Although stocks initially shrugged off the deterioration in Sino-US relations, investors are finally recognizing the potential impact of a prolonged trade war. With Chinese President Xi warning about a “new long March and “self-reliance,” there will be no quick solutions. By evoking a term that relates to Mao Zedong’s strategic retreat in 1934, China

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How EU Elections Could Impact EURO

May 22, 2019

EU Elections & Potential Euro Impact
Daily FX Market Roundup May 22, 2019
Keep an eye on EURO because there could be big moves in the currency over the next few days. European elections kick off on Thursday and the rising power of a nationalist euro-skeptic movement has many investors worried that populist parties could make strong headway. Elections will be held in 28 countries across the European Union for seats in the 751-member European Parliament. This Parliament will make crucial decisions for the Union over the next 5 years that will include border control, national autonomy and Britain’s relationship with the EU. This is the world’s second largest democratic vote, after India’s general election and while turnout in past years tend to be low, the races are tight and we

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FX: 10 Key Events to Watch this Week

May 20, 2019

FX: 10 Key Events to Watch this Week
Daily FX Market Roundup May 20, 2019
Mark your calendars. This week should be another busy one for currencies. Like recent weeks, economic reports will take a back seat to headline risk. Sino-US relations remain a key focus but we’ll be on the lookout for central bank comments. We are scheduled to hear from the heads of the US, UK, Eurozone and Australian central banks – all of them have topics related to the economy or monetary policy.
Here are the 10 key events to watch this week (in order of release)
1. Fed Chair Powell speech on Monday evening at the Atlanta Fed Financial Markets Conference
2. RBA Minutes & Governor Lowe’s speech on “The Economic Outlook & Monetary Policy” Monday evening
3. BoE Governor Carney’s testimony on the May

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