Dollar Stabilizes Against Shekel Amid Soaring US Bond Yields

The Israeli currency market is reacting to global economic and geopolitical factors, including significant US macroeconomic data releases, geopolitical developments, rising oil prices, and soaring US Treasury yields. The dollar is currently trading slightly below 3.08 shekels, after reaching that level on the previous day. The euro remains relatively stable, trading above 3.49 shekels.

Internationally, the dollar index (DXY) is hovering around 101.2 points against a basket of major currencies, nearing a two-month high and on track for its best monthly performance since June. The euro is trading near a three-month low against the dollar, around $1.1367, influenced by cautious signals from the European Central Bank regarding inflation measures. The British pound is also near a three-month low against the dollar, trading around $1.3248.

US Treasury yields have reached multi-year highs, with 10-year yields at their highest since 2007 and 30-year yields at their highest since 2004. Two-year Treasury yields, sensitive to interest rate expectations, have surpassed a two-year peak and are approaching 5%.

These market movements are occurring against a backdrop of rising oil prices, with Brent crude nearing $106 per barrel, partly due to doubts about ending the conflict with Iran after President Trump rejected Tehran's ceasefire offer. Investors are now awaiting key US macroeconomic data: the Personal Consumption Expenditures (PCE) price index on Thursday, a favored inflation gauge by the Federal Reserve, and the September jobs report on Friday.

Market expectations for a US interest rate hike at the end of October have significantly increased, with the CME FedWatch tool indicating over a 70% probability, up from 57% a week ago.