A look at the day ahead in European and global markets from

Ankur Banerjee

Fed Chair Jerome Powell's sort of dovish comments have cemented

an interest rate cut in September, at least in markets' eyes,

with the prospect of Donald Trump making a return to White House

keeping trades associated with it in play and on investor minds.

In what could be his last public comments before the U.S.

Federal Reserve goes into a blackout ahead of its July 30-31

policy meeting, Powell remained cautious but suggested that

recent inflation data have been in the right direction for the

inflation rate to return to the Fed's target of 2%.

"We've had three better readings, and if you average them,

that's a pretty good place," he said at an event on Monday.

The comments were enough for markets to once again shift

rate expectations, with traders anticipating 68 basis points of

easing this year. A rate cut in September is now fully priced

in, the CME FedWatch tool showed.

That has left the U.S. dollar swaying, with the greenback

weakening in the wake of Powell's comments but seeing a bit of

strength in Asian hours as investors ponder what a Trump

presidency could mean for inflation and interest rates.

Trump made a triumphant entrance at the first night of the

Republican National Convention on Monday, receiving a raucous

ovation from the party faithful two days after a would-be

assassin's bullet grazed the former U.S. president's right ear.

The attack has bolstered expectations of a Trump victory in

the November election, with cryptocurrencies surging, gold

stalking a record high and the bond yield curve steepening as

investors favour so-called Trump-victory trades.

In Europe, futures indicate bourses are due for a subdued

start on Tuesday and, with little in the economic calendar for

investors to take cues from, Trump and Powell will yet again

dictate market movement.

Focus will be given to luxury stocks in the wake of Burberry ( BBRYF )

on Monday flagging a possible loss and scrapping its

dividend. A gauge of the top 10 European luxury stocks

lost 3% on Monday, its biggest one-day percentage

decline in 10 months.

Key developments that could influence markets on Tuesday:

* Economic events: euro zone trade balance for May, U.S.

retail

sales

* Earnings: U.S. earnings season is underway: BofA, Morgan

Stanley

and UnitedHealth