Dollar Stabilizes Globally, Edges Up Against Shekel Above 3.04

The U.S. dollar stabilized in global markets on Thursday after sharp gains the previous day, while experiencing a slight increase locally, trading above 3.04 shekels, up 0.2%. The Euro also saw a modest rise, trading above 3.46 shekels, up 0.3%.

Globally, the Dollar Index, which measures the dollar against a basket of major currencies, remained largely unchanged near 101.1 points. The Euro held steady above $1.13, and the British Pound was stable above $1.32. In Japan, the dollar weakened by 0.2% against the yen, trading at 158.0 yen.

These movements follow a significant rally in U.S. bond yields, with the 10-year Treasury yield jumping 14 basis points to 4.11% on Wednesday. Analysts attribute the dollar's sustained strength to the robust U.S. economic growth and increasing market expectations of aggressive interest rate hikes by the Federal Reserve.

"Given the relative strength of U.S. growth and the markets increasingly pricing in aggressive rate hikes from the Fed, the U.S. dollar continues to maintain its appeal as a safe haven asset," stated Chris Weston, Head of Research at Pepperstone. He noted that signs of a potentially overheating U.S. economy are a key focus, suggesting the Fed might need to tighten monetary policy further if inflation continues to rise unexpectedly.

Inflationary risks have also been amplified by a nearly 4% surge in oil prices following Iranian President's declaration of defiance, alongside market reactions to U.S. President Donald Trump's ban on diesel exports. Traders are now assigning nearly a 70% probability to another interest rate increase at the upcoming Federal Reserve meeting on October 27-28, up from 60% just a week prior.