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Signs that U.K. PM May can be able to strike a coalition deal with the DUP lifted the pound while the Greenback drew support from a rebound in U.S. equities.

  • DUP leader Foster: Discussions with PM May “going well”
  • Foster: Hopes to seal the deal “sooner rather than later”
  • U.S. headline PPI flat in May as expected
  • U.S. core PPI up by 0.3% vs. projected 0.2% uptick
  • U.S. NFIB Small Business index unchanged at 104.5 vs. 105.2 consensus

Major Events/Reports

U.K. coalition gov’t in the works

Prime Minister Theresa May and DUP leader Arlene Foster recently had a sit-down to discuss a potential coalition government over a cup o’ tea. In case you missed it, the U.K. snap elections resulted to a hung parliament in which no political party has absolute majority.

May has already apologized to the MPs who have lost their seats due to this and has gotten busy trying to fix the political mess just weeks before Brexit talks kick off. Foster mentioned that the discussions are “going well” and that she is hopeful that a “successful conclusion” will be reached sooner rather than later.

Of course there are still a few issues that need to be ironed out such as the coalition government’s stance on abortion or gay rights, but market watchers seem to be regaining confidence in the U.K. economy’s ability to overcome these setbacks.

Commodities rebound on risk-taking

Commodities were dropping in the previous trading sessions but a quick bounce was seen even after Libya announced its output forecasts.

According to the NOC chief, the current pace of production is around 830K barrels per day and this could reach 1 million next month. He also announced that Libya will resume production for Germany’s Wintersall now that the dispute has been settled.

Keep in mind that Libya is exempted from the OPEC output deal and its extension, which means that its production levels could make the cartel’s production cap less effective and keep global oversupply concerns in play.

  • WTI crude oil is up to $46.37 per barrel (+0.63%)
  • Brent crude oil is up to $48.62 per barrel (+0.70%)

Risk-taking also dampened gains for gold, which is often considered a safe-haven asset, and other precious metals.

  • Gold is flat at $1,270.10 per troy ounce (0.00%)
  • Silver is down to $16.840 per troy ounce (-0.61%)
  • Copper is down to $2.596 per troy ounce (-0.75%)

U.S. equity indices rebounded from a shaky start on Monday as traders may also be positioning ahead of a likely FOMC hike.

  • S&P 500 index is up 10.75 points to 2,437.25 (+0.44%)
  • Nasdaq is up 38.5o points to 5,757.62 (+0.67%)
  • Dow 30 is up 92.80 points to 21,328.47 (+0.44%)

Major Market Mover(s):

GBP

The pound got another push higher after the previous session’s upbeat CPI release and signs that a coalition government in the U.K. is materializing.

GBP/USD is up to 1.2754 (+0.76%), GBP/JPY climbed from 139.19 to 140.22 (+0.75%), EUR/GBP is down to .8788 (-0.70%), and GBP/AUD recovered to 1.6914 (+0.76%).

Watch Out For:

  • 11:45 pm GMT: New Zealand current account balance (0.95B NZD surplus expected, 2.43B NZD deficit previous)
  • 11:45 pm GMT: New Zealand food price index
  • 1:30 am GMT: Australia Westpac consumer sentiment (-1.1% previous)
  • 3:00 am GMT: Chinese industrial production y/y (6.4% expected, 6.5% previous)
  • 3:00 am GMT: Chinese fixed asset investment ytd/y (8.8% expected, 8.9% previous)
  • 3:00 am GMT: Chinese retail sales y/y (10.8% expected, 10.7% previous)
  • 5:30 am GMT: Japanese industrial production (upgrade from 4.0% to 4.1% expected)