Dollar Strengthens Against Shekel Following Interest Rate Cut

The U.S. dollar saw a slight increase against the Israeli shekel on Wednesday, rising by 0.1% to trade at 3.04 shekels. This shift follows the Bank of Israel's decision the previous day to lower interest rates, continuing its monetary easing policy. The move was made despite concerns about rising energy prices, a potentially expanding defense budget, and a tight labor market.

The central bank's monetary policy committee, led by Governor Amir Yaron, opted to reduce rates amidst an annual inflation rate of 1.5% and a strong shekel. The committee noted that July's inflation data kept the annual rate below the target midpoint, with core inflation also at 1.5%. Forecasters anticipate inflation will remain near the target midpoint in the coming months, with expectations for the year ahead remaining anchored.

In parallel, the euro weakened against the shekel by 0.02% to 3.51 shekels, and the British pound remained stable at 4.1 shekels. Globally, the dollar mirrored this trend against major currencies, weakening by 0.14% against the euro to $1.15 and by 0.13% against the pound to $1.35. The dollar index itself saw a modest improvement of 0.12%, reaching 99.79 points.