Dollar Hits 18-Month Global High, Reaches 3.1 Shekels Amid Inflation Fears
Translated & summarized from Calcalist by baba
The U.S. dollar reached a new 18-month global high and hit 3.1 shekels against the Israeli currency, its strongest point since April 8, following strong U.S. inflation data. The figures revived expectations of a Federal Reserve interest rate hike, with traders now pricing in a 67% chance of a hold at the upcoming meeting. Global financial leaders in Bangkok discussed debt concerns, with the IMF urging fiscal adjustments and the euro weakening amid oil price rises and worries about France's fiscal health.
The story in 6 lines · by baba
- The U.S. dollar reached 3.1 shekels, its highest level against the Israeli currency since April 8.
- Stronger-than-expected U.S. inflation data fueled expectations of a Federal Reserve interest rate hike.
- The dollar index hit an 18-month high globally due to renewed inflation concerns.
- Traders now see a 67% chance the Fed will keep interest rates unchanged in late October.
- Global financial leaders in Bangkok discussed debt management and fiscal adjustments.
- The euro fell to a 17-month low against the dollar amid rising oil prices and French fiscal concerns.
The U.S. dollar reached 3.1 shekels against the Israeli currency on Tuesday, its highest point since April 8, before stabilizing. This surge followed the release of U.S. Consumer Price Index data, which significantly boosted the dollar against the shekel and other major global currencies. The euro remained steady at 3.44 shekels.
The dollar's global strength, hitting an 18-month peak, was driven by stronger-than-expected inflation figures that revived expectations of a Federal Reserve interest rate hike. These numbers heightened concerns that price pressures are broadening across the U.S. economy. The U.S. Bureau of Labor Statistics reported a sharp rise in the September CPI, largely due to increased fuel prices.
"The higher-than-expected inflation data in the core index raises concerns that energy-driven inflation is spreading to other areas of the economy," stated Otto Schnyder, a senior investment strategist at Mesirow Currency Management. He added that expectations for an October Fed rate hike surged, making it a more serious consideration.
Traders now estimate a 67% chance the Fed will hold rates steady at its October 27-28 meeting, up from 53% a month ago. They are pricing in approximately 79 basis points of monetary tightening by the end of 2027. "Inflation was hotter and spread across more areas, so this is definitely not a one-off situation," commented Marvin Loh, a senior global markets strategist at State Street. "I think the Fed will eventually have to have a serious conversation about it."
Meanwhile, global financial leaders meeting in Bangkok for the IMF and World Bank annual meetings addressed debt concerns. Rodrigo Valdes of the IMF emphasized the urgency for governments to curb debt growth, while IMF Managing Director Kristalina Georgieva urged the U.S. to make fiscal adjustments to ensure its debt sustainability. The euro weakened against the dollar, reaching a new 17-month low, influenced by rising oil prices and ongoing concerns about France's fiscal health. European Central Bank President Christine Lagarde noted that France needs to address its debt issues through fiscal consolidation.
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