US inflation the main focus in the day ahead

Markets are focused on the upcoming June US CPI report, which could influence Fed rate expectations and broader risk sentiment. Inflation is expected to cool modestly, with headline CPI seen easing to 3.8% year over year from 4.2%, helped by a sharp drop in gasoline and energy prices. Core inflation is expected to remain sticky at 2.8%. The report has added importance because renewed US-Iran tensions have pushed oil prices higher again, with WTI near $80 and Brent around $85, potentially complicating the inflation outlook. Traders are currently pricing about a 43% chance of a July rate hike and a full 25 bps hike in September. The article also notes the World Cup may have boosted spending in US host cities, especially in food and lodging categories, which could mildly lift CPI prints and affect market reactions.