Dollar Declines Amid Surprise Consumer Confidence Drop

The US dollar index (DXY00) fell from its one-month high today, dropping by -0.04%. This decline was largely due to an unexpected drop in consumer confidence and lower inflation expectations.

According to the Conference Board's July survey, consumer confidence plummeted by 1.4 points to 90.8, below expectations of a rise to 92.4. Additionally, the US May S&P composite-20 home price index rose by 1.6% year-over-year, exceeding forecasts of 1.3%, but this failed to stem the dollar's decline.

The weak data led markets to discount a 32% probability of a 25-basis-point rate hike at the upcoming FOMC meeting. Meanwhile, the euro and yen benefited from safe-haven demand amid ongoing tensions in the Middle East and lower crude oil prices.