2019.06.1716:52:00UTC+00Dollar Moves In Tight Range As Traders Await Fed Policy

The U.S. dollar stayed in a very tight range on Monday with traders largely staying wary of building up positions ahead of the U.S. Federal Reserve's monetary policy meeting this week.

The U.S. central bank, which is scheduled to meet on Tuesday and Wednesday, is widely expected to hold interest rates unchanged this month although it is very likely to signal a rate cut sometime in the near term.

CME Group's FedWatch tool currently indicates just a 22.5% chance the Fed will cut rates this week but a 65.7% chance for a rate cut next month.

The dollar lost ground against major currencies earlier in the day after data showed New York Fed's Empire manufacturing activity unexpectedly contracted in June.

Data from the Federal Reserve Bank of New York showed that manufacturing activity in New York took a sharp downward turn in the month of June, with the activity index for the sector showing a record monthly decline, plunging to -8.6 from 17.8 in May. Economists had expected the index to drop to a positive 10.0.

Meanwhile, data from the National Association of Home Builders showed that U.S. homebuilder confidence unexpectedly pulled back in June, after reporting a substantial improvement in the previous month.

The NHAB/Wells Fargo Housing Market Index dropped to 64 in June after jumping to 66 in May. Economists had expected the index to inch up to 67.

The dollar index, which dropped to 97.34 in morning trades, rose to 97.60 later on in the session, and was last seen moving around 97.57, its previous close.

Against the euro, the dollar was down by about 0.05%, at $1.1217, recovering from a low of $1.247.

The British pound sterling was down more than 0.4% against the greenback, with a unit of Sterling fetching $1.2535, as compared to $1.2589 in late trades on Friday.

The Bank of England is scheduled to announce its policy on Thursday.

The U.S. dollar was down slightly against the Canadian loonie and Swiss franc, with the respective pairs trading at 1.3413 and 0.9988, respectively.

Against the aussie, the dollar was up by about 0.3% at 0.6852.

The Japanese yen was little changed at 108.54 a dollar. The yen moved between 108.43 and 108.73 a dollar.

It is felt that the U.S.-China trade dispute is contributing to a slowdown in U.S. economic growth, giving rise to speculation that the central bank is likely to cut rates. Recently, the Fed chairman Jerome Powell commented that the bank will act "as appropriate" to sustain economic expansion.