(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, June 18 (Reuters) - What matters in U.S. and

global markets today

I'm excited to announce that I'm now part of

Reuters Open Interest (ROI)

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The alarming Israel-Iran war is keeping world oil prices

volatile, but crude moves have not yet hit red-alert territory,

and markets are now turning their attention to Wednesday's

Federal Reserve policy decision.

I'll discuss this and all of the market news below. Be sure to

check out today's column, where I explain why the dollar's

decline may persist despite signs that 'short dollar' is already

a crowded trade.

Today's Market Minute

* Thousands of people were fleeing Tehran on Wednesday after

U.S. President Donald Trump said they should leave the capital,

while a source said Trump was considering options that include

joining Israel in attacking Iranian nuclear sites.

* Oil prices eased in Asian trade on Wednesday, after a gain of

4% in the previous session, as markets weighed the chance of

supply disruptions from the Iran-Israel conflict against a U.S.

Federal Reserve rates decision that could impact oil demand.

* While global energy markets are not yet pricing in worst-case

scenarios for the Israel-Iran war, oil tanker rates are

providing a good real-time gauge of the escalating risks, writes

ROI columnist Ron Bousso.

* Energy equity investors are adjusting their positions in an

attempt to pick winners and cut losers as President Donald

Trump's tax-and-spending bill makes its way through the U.S.

Congress. Read the analysis from ROI energy transition columnist

Gavin Maguire.

* As debate rages around 'de-dollarization' and the world's

appetite for dollar-denominated assets, one major cohort of

overseas investors appears to be quietly backing away from U.S.

securities: central banks. Check out the latest from ROI markets

columnist Jamie McGeever.

Oil ebbs again as Fed meets

The intensity of the Middle East conflict went up several

more notches overnight amid speculation the U.S. military would

join the attacks on Iran.

The central question now is whether the U.S. air force would

be involved in any attempt to take out Iran's underground

nuclear enrichment facilities, particularly the Fordow plant.

An Israeli military strike on Iran's nuclear complex at

Natanz directly hit the underground uranium enrichment operation

there, the U.N. nuclear watchdog said on Tuesday, after

initially reporting only indirect damage.

Markets have to calculate whether we're apt to see a long

drawn-out war and related energy disruptions or a shorter and

more decisive outcome that could limit any hit to Iranian crude

supply.

Back home in the U.S., any energy shock would

be economically and politically sensitive. And it's unclear how

much public support there would be for involvement in the sort

of foreign wars Trump campaigned to keep America out of.

So far, U.S. crude prices remain relatively contained

despite the war, slipping back slightly again on Wednesday to

just under $75 per barrel.

Even though spot prices have risen about 14% since the start

of last week, they have not breached intraday highs set last

Friday nor the $80-plus peak hit in January, and they also

remain down 7% year on year. What's more, crude prices remain

below the average of the past two years since the latest wave of

Middle East conflict was triggered by Hamas's Oct 7, 2023 attack

on Israel.

Gold price moves have also been moderate over the

past week, as the prices of the safe haven have failed to hit

new records set in April and slipped on Wednesday. The dollar

and Swiss franc both edged lower again too today, the

latter impacted by a likely interest rate cut to zero from the

Swiss National Bank tomorrow.

U.S. stock futures were higher ahead of the open

after a near 1% drop in the S&P 500 index on Tuesday.

The Fed decision, press conference and new economic

projections later today will keep many markets in check,

however, not least as they come before the U.S. 'Juneteenth'

public holiday and market closures on Thursday.

No change in the Fed policy rate is expected, especially now

that the edgy energy outlook is adding to the already uncertain

U.S. import tariff picture. But the Fed's nods and winks about

its future course will be crucial as always, not least its 'dot

plot' of policymakers' expectations on future rate moves.

The most recent set of quarterly projections penciled in two

more rate cuts by year-end, but there's some speculation that

may be reduced to one in today's update. As of Wednesday,

futures markets were pricing in 45 basis points of easing by

December.

Treasury yields fell back ahead of the meeting,

following a series of soft U.S. economic readings for May on

retail, industrial activity and housing.

Treasuries got an additional lift as the Fed announced a

board meeting for June 25 to consider plans to ease leverage

requirements on larger banks, kicking off what is expected to be

a broad effort to reconsider bank rules.

Changes to the so-called "supplementary leverage ratio,"

which requires banks to set aside capital against assets

regardless of their risk, could enable banks to hold more

Treasuries.

Elsewhere, stocks were mixed to higher around the world,

with Hong Kong underperforming and European defense

stocks a big gainer.

Sweden's crown weakened after the Riksbank cut its

key interest rate to 2.0% from 2.25% as expected on Wednesday,

saying it may ease further before the end of the year.

And Bitcoin remained relatively subdued even after

the U.S. Senate on Tuesday passed a bill to create a regulatory

framework for dollar-pegged cryptocurrency tokens known as

stablecoins, seen by some as a watershed moment for digital

assets.

In today's deep dive, I look at whether the dollar's steep

losses this year may already have run their course or whether

this is longer-term exit from the currency.

Chart of the day

Much like world oil prices, freight rates out of the Persian

Gulf have jumped sharply since the start of the Israel-Iran war

on June 13. But also like crude prices, these shipping rates

have so far failed to even hit their highest points for the year

to date, never mind longer-term historical highs. Concerns about

shipping disruption and energy supplies have clearly risen, but

with too many contrasting scenarios for the conflict's outcome

still in play, traders may be wary of betting one way or the

other.

Today's events to watch

* U.S. May housing starts, weekly jobless claims (8:30 AM

EDT), April TIC data on foreign holdings of Treasury securities

(4:00 PM EDT)

* Federal Reserve's Federal Open Market Committee policy

decision (2:00 PM EDT), news conference from Fed Chair Jerome

Powell and policymakers' new economic and rates projections

* European Central Bank Vice President Luis de Guindos and

heads of central banks of Italy, Spain, Netherlands, France and

Germany meet students in Milan; ECB chief economist Philip Lane

speaks in Amsterdam; Bank of Canada governor Tiff Macklem speaks

* U.S. corporate earnings: Progressive

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

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