Dollar steadies near 2.98 shekels as markets await key U.S. inflation data

The foreign exchange market was calm on Thursday, with only slight moves in Israel and abroad. In local trading, the dollar fell 0.1% to around 2.98 shekels, while the euro slipped 0.1% and traded above 3.38 shekels.

In global markets, after the dollar’s strong gains the previous day, the dollar index eased 0.1% to 101.5 after touching 101.8 on Wednesday. The euro rose 0.1% to above $1.13, and the pound gained 0.1% to just under $1.32.

Investors were waiting for May core PCE data later in the day, the Federal Reserve’s preferred inflation gauge. Economists expect a 0.3% monthly rise in core personal consumption expenditures and a 3.4% annual increase. Analysts also said the sharp drop in oil prices back to prewar levels should help slow inflation in coming months.

U.S. Treasury yields fell sharply overnight as long-dated bonds rallied. The 10-year yield dropped 8 basis points to 4.41%, the 30-year yield fell 8 basis points to 4.86%, and the two-year yield, which reflects expectations for Fed rates, declined 5 basis points to 4.15%. Steve Englander, head of global G10 currency research at Standard Chartered in New York, said the move in rates and the dollar reflects market expectations of stronger U.S. economic performance ahead. He added that productivity growth, partly driven by artificial intelligence, should support corporate profits and capital inflows to the United States, which would favor a stronger dollar, according to CNBC.