Currencies: Sterling clings to gains on conflicting Brexit news, dollar holds steady

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The British pound jumped against its major rivals Tuesday on multiple reports hailing a next stage of Brexit negotiations, even as other reports seemed to contradict them.

Where are currencies trading?

Sterling GBPUSD, +0.1727% , which had spent much of Tuesday’s session in negative territory, rallied to $1.3359, up from $1.3319 late Monday.

The euro slipped 0.8% against the pound EURGBP, -0.6716% , with one euro buying £0.8869.

See: How conflicting Brexit headlines sent the British pound on a wild ride

The ICE U.S. Dollar Index DXY, +0.36%  held on to previous gains despite the move in sterling, rising 0.4% up at 93.230, building on Monday’s modest gain. The gauge remains down for the year, showing a drop of 9%. The broader WSJ U.S. Dollar Index BUXX, +0.26%  was 0.2% higher at 86.62.

The euro EURUSD, -0.4874%  remained lower against the dollar, changing hands at $1.1844, down from $1.1900 on Monday, when the shared currency briefly appeared to be on track to touch $1.20 before dollar strength made that impossible.

Against the Japanese yen USDJPY, +0.32% , the buck traded at ¥111.41, up from ¥111.10 late Monday, shrugging off the strength that the yen displayed over the past days. The pair picked up steam near the end of the session, following reports that North Korea had fired a missile eastward.

Meanwhile, against the Canadian dollar USDCAD, +0.3916% the U.S. dollar bought C$1.2809, up 0.3% versus late Monday.

What could help drive the market?

In the U.K., sterling was taken for a turbulent ride as reports of an agreement outlining details of the “divorce” between London and Brussels led the currency to spike, just before a conflicting report said a U.K. government official “did not recognize this account of the negotiations.” That came ahead of a meeting between Prime Minister Theresa May and European Commission President Jean-Claude Juncker next week.

If the deal proved to be true, it would be a very positive achievement for May, but for now clarity was lacking, said market participants.

Back in the U.S., Jerome Powell’s confirmation hearing in Washington was closely watched for hints about the future Fed chairman’s approach to monetary policy. But following an at-times heated question-and-answer session, much of his thinking appeared to be in line with that of current Chairwoman Janet Yellen, from whom he will take the baton next year.

See: Recap: Powell says case for December rate hike ‘is coming together’

Also read: Fed would respond ‘aggressively’ to Senate tax bill, congressional committee says

In other Washington news, House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer canceled a meeting with President Donald Trump on Tuesday, following a presidential tweet in which he said he didn’t see a deal with them, which put the possibility of a government shutdown back on the table.

Read: Trump Today: ‘Chuck and Nancy’ cancel meeting after president talks down prospect of funding deal

What are strategists saying?

Tuesday’s hearing “contained few signs that he will bring any new thinking or a change of approach to the FOMC,” according to Michael Pearce, U.S. economist at Capital Economics.

“With fewer qualified and experienced members on the committee in decades, we are increasingly worried that a policy mistake in either direction is possible in the years ahead,” he said, adding that the Senate is expected to confirm him and that near-term Fed expectations, including the December rate hike, remain intact.

What are the data?

Advance trade in goods for October recorded a deficit of $68.3 billion, which was wider than the MarketWatch consensus estimate of a $65 billion deficit.

The reading of Case-Shiller home prices rose by 0.7% in the three-month period ended in September, compared with 6.1% in August.

November consumer confidence came in at 129.5, beating consensus estimates of 124.8, and recording the highest level in 17 years.

Read: Bond traders don’t care about nonfarm payrolls anymore

Check out: MarketWatch’s Economic Calendar