Dollar Holds Steady Against Shekel Amid Global Currency Fluctuations

Global and local currency markets have stabilized, with the US dollar trading around 3.07 Israeli shekels and the Euro slightly below 3.48 shekels. Globally, the dollar index remained largely unchanged at 101.4 points against major currencies. The Euro held steady above $1.13, and the Pound remained above $1.32. The dollar saw a slight 0.3% weakening against the Japanese Yen, trading at 156.9 yen.

These movements follow a relatively dovish speech by John Williams, President of the Federal Reserve Bank of New York. Speaking at the University at Buffalo, Williams indicated that there is no immediate need to raise interest rates, suggesting a patient approach to gathering more economic data before the next Federal Reserve meeting on October 28. Following his remarks, market expectations for an interest rate cut in the upcoming month decreased to 49%, down from 71% earlier in the week, according to CME Group's forecast tools.

Williams also suggested that a further Fed rate hike might be appropriate by the end of the year, contingent on economic developments aligning with his forecasts. He emphasized that these were his personal views and not a solidified position of the central bank. He noted a lack of evidence that pressures from tariffs, energy costs, and AI investments are spreading into broader, more persistent inflation. Williams anticipates inflation to reach 3.5% by year-end, slightly above the Fed's 2% target for next year, with a return to the 2% target projected for 2028.

In a separate development, Morgan Stanley's global foreign exchange head, James Lord, revised the bank's forecast. They now anticipate dollar strengthening through the end of the year and into 2027, a shift from their previous expectation of dollar weakening in the latter half of this year. Morgan Stanley projects the Euro to fall to $1.10 by mid-2027, citing widening interest rate differentials between the US and the rest of the world, robust US economic growth, and risk premiums in Europe as factors supporting the dollar.