The European session saw a broadly positive tone, carrying over from yesterday's US CPI data. Cooling inflation in the US has significantly bolstered expectations for Fed rate cuts later in 2026, leading to a global risk-on rally. European equities, particularly the DAX, shrugged off earlier bearish sentiment to post gains, although the FTSE 100 remained subdued by lingering domestic concerns and weaker GDP figures. Precious metals like gold and silver, conversely, trended downwards as safe-haven demand dissipated amidst a stronger US Dollar and rising equity markets. Energy commodities, Brent and WTI, saw slight pullbacks after earlier volatility driven by Middle East geopolitical risks. The US pre-market indicates a strong opening for equities, with S&P 500 and Nasdaq futures pointing higher, potentially towards new records. This broad optimism is underpinned by the narrative of 'soft landing' for the US economy and a more dovish Fed outlook.

The immediate focus for the US session will be the release of US Core Retail Sales and Retail Sales figures at 12:30 ET. Stronger-than-expected retail sales could temper rate cut expectations slightly by suggesting robust consumer demand, while weaker figures might reinforce the dovish Fed narrative. Additionally, the weekly Unemployment Claims data could provide insights into the labor market strength. Several FOMC members are scheduled to speak throughout the day, and their comments on the economic outlook and monetary policy will be scrutinized for any shifts in stance. Geopolitical tensions, particularly in the Middle East, remain an underlying risk for energy markets.