The dollar index (DXY00) today is down by -0.21%.  The dollar is under pressure ahead of the results of today's 2-day FOMC meeting, where the Fed is expected to keep interest rates unchanged. The dollar dipped to its lows today on the weaker-than-expected reports on US May housing starts and building permits. Losses in the dollar are contained as heightened geopolitical risks in the Middle East support safe-haven demand for the dollar. 

US weekly initial unemployment claims fell -5,000 to 245,000, right on expectations.

US May housing starts fell -9.8% m/m to a 5-year low of 1.256 million, weaker than expectations of 1.350 million.  May building permits, a proxy for future construction, unexpectedly fell -2.0% m/m to a 4-3/4 year low of 1.393 million, weaker than expectations of no change at 1.422 million.

The markets are discounting the chances at 0% for a -25 bp rate cut after today’s FOMC meeting.

EUR/USD (^EURUSD) today is up by +0.29%.  The euro is moving higher today due to weakness in the dollar.  Gains in the euro are limited due to dovish comments from ECB Governing Council member Panetta, who stated that the Eurozone's economic prospects face "substantial" risks due to US tariffs and the ongoing conflict in the Middle East.

Swaps are discounting the chances at 6% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

USD/JPY (^USDJPY) today is down by -0.29%.  The yen is climbing today as heightened geopolitical risks in the Middle East have prompted safe-haven buying of the yen.  Today's report showing a smaller-than-expected decline in Japan's Apr core machine orders is also supportive of the yen.  In addition, lower T-note yields today are bullish for the yen.

Japan Apr core machine orders fell -9.1% m/m, a smaller decline than expectations of -9.5% m/m.

Japanese trade news was mixed as Japan's May exports fell -1.7% y/y, a smaller decline than expectations of -3.7% y/y.  However, May imports fell -7.7% y/y, weaker than expectations of -5.9% y/y and the biggest decline in 16 months.

August gold (GCQ25) today is down -2.90 (-0.09%), and July silver (SIN25) is down -0.146 (-0.39%).  Precious metals today are slightly lower.  Expectations that the FOMC will keep interest rates unchanged following today's 2-day policy meeting are weighing on precious metals.  Today's weaker-than-expected reports on US May housing starts and building permits show weakness in industrial metals demand and are undercutting silver prices. 

Lower global bond yields and a weaker dollar today are limiting losses in precious metals.  Also, heightened geopolitical risks in the Middle East support safe-haven demand for precious metals as the war between Israel and Iran continues for a sixth day with no end in sight.  In addition, global trade uncertainty is boosting safe-haven demand for precious metals after President Trump indicated last Wednesday that he is moving ahead with his reciprocal tariffs.  Gold garnered some support today as an inflation hedge after the US 10-year breakeven inflation rate rose to a 2-week high.  Fund buying of silver continues to support prices as silver holdings in ETFs rose to a 2-1/4 year high Tuesday.