- Risk appetite has returned on Tuesday, favoured by easing concerns about an escalation of the Middle East conflict. This is pushing risk assets higher and weighing on the safe-haven USD.
- Israeli authorities have affirmed that they are willing to avoid an all-out war in the Middle East. This has calmed markets, which are wary that the reaction would attract a direct involvement of Iran in the conflict.
- In the economic calendar on Tuesday, the US JOLTS Job Openings are expected to have dropped slightly, to 8.03 million in June from 8.14 million in May.
- Also today the Conference Board’s Consumer Sentiment Index is seen contracting to 99.5 in July from the 100.4 posted in the previous month.
- The main focus, however, is the Fed’s monetary policy meeting. Data from the CME Group Fed Watch Tool shows that markets are pricing only a 4.1% chance of an interest rate cut on Wednesday, while a 25 bps rate cut is fully priced for September.
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