In the new trading week, investors are likely to be eagerly awaiting the Fed's interest rate decision in particular. However, investors could be distracted from developments in the trade dispute by the geopolitical risks in the Middle East conflict between Iran and Israel.
Middle East conflict between Iran and Israel remains in focus - New détente in the trade dispute?
It remains to be seen how long the legs of geopolitical stock markets will be this time. The conflict in the Middle East still has the potential to catch market participants on the wrong foot.
Market participants are also likely to continue to bet on further easing in the trade dispute. In the previous week, China and the US came closer in the tariff conflict. After two days of negotiations in London, they were able to agree on a "general framework", it was reported. There has currently been a 90-day break since mid-May. The two largest economies in the world recently agreed in Geneva to reduce their tariffs on imports by 115 percentage points from 145% and 125% respectively and to continue negotiations.
US retail sales in focus on Tuesday - Jerome Powell in the spotlight
From the perspective of the economic calendar, comparatively little data will be important in the coming days. US retail sales will be published on Tuesday (14:30).
The weekly initial claims for US unemployment benefits are expected on Wednesday (14:30).
In the middle of the week, however, attention is likely to be focused entirely on the US Federal Reserve meeting. While the key interest rate decision is expected at 20:00, investors are likely to scan the scheduled FOMC press conference with Jerome Powell for monetary policy clues from 20:30.
"Fed watch tool" anticipates interest rate pause
However, it remains unlikely that the Fed will turn the interest rate screws. The CME Group's "Fed Watch Tool" currently estimates the chance of a rate pause at 99.8%. The probability that the monetary authorities will initiate a rate cut of 25 basis points at the meeting on July 30, 2025 is currently 18.6%.
While there is no relevant economic data on Thursday, last but not least there could be some impetus on Friday with the Philly Fed manufacturing index (14:30).
Dow Jones Industrial Average Index
Source: IG trading platform
