A new Chair, a record-low Michigan print, and the dollar still hasn’t moved.

DXY 99.03 · EUR/USD 1.1648 · USD/JPY 159.28 · Brent $92.91 · XAU $4502

Two things that should have moved the dollar this month did not. On 15 May, Kevin Warsh was sworn in as the 17th Chair of the Federal Open Market Committee, completing the Powell handover that markets had been pricing since the spring. On 23 May, the University of Michigan revised its May consumer-sentiment index to 44.8, a record low for the series. The dollar index closed both days inside its three-month range. DXY today sits at 99.03, essentially where it was when we wrote the last update three sessions ago and within half a point of where it was when we wrote the original piece on the 22nd. The story has not moved because the things that would have repriced the dollar simply have not been repriced.

Warsh's first FOMC is 16-17 June

The handover is the obvious set piece. Warsh inherits a Committee that just dissented 8-4 at its April meeting, the most fractured vote since October 1992. The June 16-17 decision is his first as Chair; the SEP and the press conference are the moments at which a framing change could land. Markets have not moved to price one in advance. The OIS path through year-end is essentially flat versus where it sat in mid-April. The hawkish and dovish camps inside the Committee have left this for the new Chair to manage.

There is a non-trivial chance the June framing surprises in either direction, and the dollar will move on the surprise rather than on the level. The trade that has the asymmetric payoff into the meeting is a fade of the consensus, not a momentum position on the consensus.

Michigan 44.8 is the more interesting data point

Consumer-sentiment surveys are noisy, and Michigan in particular has been more reactive to media coverage than to the underlying consumption print. Even allowing for that, 44.8 is the lowest reading on a series that goes back to 1952. The previous all-time low (June 2022) was 50.0. The current print sits more than five points below it.

What the dollar usually does with a Michigan miss of this size is sell off through the activity-channel: lower sentiment feeds the relative-growth differential we have been pointing at since the 22 May piece. The dollar has not done that this week because the market is choosing to wait for the harder data (JOLTS, ADP, payrolls) before re-pricing the OIS path. The risk is asymmetric; a soft payroll on top of a record Michigan would be a difficult sequence for the dollar to absorb without giving up another half to one percent.

What the cross-asset board is saying

The correlation matrix we published yesterday has not flipped. DXY-Brent is still positive when its textbook sign is negative; the dollar and oil are unwinding the early-2026 geopolitical premium together. With Brent now around $93 (down from above $107 a month ago) the unwind is mature but not finished. Until DXY-Brent reverts to negative, the dollar's path is being driven by the same flow that is driving oil, not by the OIS curve.

Gold is at $4502, which puts it inside its trailing one-month range and below the March highs above $5,000. The classic DXY-gold inverse is still intact at -0.7 over the last six weeks. Two relationships, one saying "the regime is unusual," the other saying "the textbook still works."

What we are watching this week

• JOLTS quits rate (Wednesday). The cleanest leading read on labour-market tightness. A drop below 2.0% would be the activity-channel cue we have been describing.
• ADP private payrolls. Imperfect predictor of NFP, but the residual versus the Bloomberg consensus is the readable variable.
• 7-year UST auction tail and bid-to-cover. The term-premium channel we covered in the curve piece. A weak tail compounds the bear-steepening narrative.
• DXY-Brent 30-day rolling correlation. A reversion back to negative is the regime-break signal.
• Speeches by Warsh and the regional Fed presidents. First Warsh appearances in the new role will be parsed for framing language.

What hasn't changed

The thesis from 22 May still holds. The dollar is being moved by the data side, not the Fed side. A new Chair and a record-low consumer-sentiment print are not, by themselves, repricing events. The Committee's 8-4 split is unresolved. The OIS curve is unchanged. The cross-asset board is doing the talking. The operative variable is the next hard data print, and there are three of them this week.