The most important things before the start of the European session

Wall Street recorded a strong series in yesterday's trade after improving sentiment. DJIA climbed nearly 350 points, S & P500 advanced 1%, and NASDAQ 1.4%. The shares in Asia followed the US rally, and we expect the European session to start higher. Futures of major European indices point to a higher opening, but markets will also begin to focus on the forthcoming Fed's interest rate decision and FOCM today at 21:00. That's why we expect some caution.

Rally in the US began after President Donald Trump tweaked "that he had a good phone call" with Chinese President Xi Jinping. Trump added, "We will have an extended meeting next week at the G-20 Forum in Japan, and our delegations will start negotiations right now." The G-20 meeting will be on June 28th.

Despite renewed optimism, there are investors who doubt the success of the upcoming meeting. ING economists say they believe the meeting will not lead to a trade deal. The news will now only positively affect the short-term, but they feel they will not have a greater impact unless the negotiations really bring about significant results.

Trade relations between the two economies continue to be strained, and have deteriorated considerably in recent months. Both countries have imposed new tariffs on their goods for billions of dollars. And Trump left the smoldering fire with his statement that he was ready to impose even more tariffs.

Meanwhile, the US central bank on Tuesday began its two-day meeting. The broadly shared expectations are that they will leave interest rates unchanged. Investors, however, will pay close attention to signals that will target a reduction next month and later in the year.

Worse data on the labor market and production activity have increased the chances of a fall in interest rates. Dismissing the conflict with Beijing is also weighing on the Fed's judgment.

At the same time, the President of the ECB, Mario Draghi, indicates that additional incentives may be imposed. The euro collapsed by nearly 0.5% a day after Draghi's comments, and later followed by Trump's criticism that the US dollar was losing competitiveness.

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