In the European session, we have a few low tier releases and the Eurozone Retail Sales report, but it’s unlikely to see the market reacting to the data given that it won’t change anything in terms of expectations.
In the American session, we’ll have the main event of the day, which is the FOMC Policy Announcement. The central bank is expected to keep interest rates steady at 4.25-4.50% and maintain a neutral stance given the uncertainty around tariffs and inflation expectations.
If it wasn’t for the market’s expectations, I would have expected this decision to be a non-event, but there’s some room for disappointment here. In fact, the market is pricing around 80 bps of easing by year-end and Fed Chair Powell will likely push back against such dovish expectations triggering a repricing.
Elsewhere, the focus remains on tariff news as we continue to await the announcement of the first trade deal expected by the end of this week or Monday at the latest. Trump said that they will have a very big and very positive announcement before the Middle East trip which could come on Thursday, Friday or Monday. It could be about tariffs, so worth to keep an eye on that
