The dollar index (DXY00) is little changed today. Weaker-than-expected reports today on US May housing starts and building permits are undercutting the dollar. Also, today's -3% fall in WTI crude oil to a 3.25-month low is bearish for the dollar, as it lowers inflation expectations and could prompt the Fed to pursue easier monetary policy. The dollar has some negative carryover from Monday when the US and Iran announced a deal to end the war, which curbed safe-haven demand for the dollar.
The dollar's focus will turn to the 2-day FOMC meeting that begins today and will be the first under the leadership of new Fed Chair Kevin Warsh. While the Fed is expected to keep interest rates unchanged, the spotlight will be on how Mr. Warsh navigates the post-meeting press conference and the outlook for inflation.
