Dollar Falls Slightly to 2.99 Shekels Amid Weak US Jobs Report and Awaited Bank of Israel Rate Decision

The US dollar experienced a modest decline in global markets following a weak US employment report released yesterday, which showed a significant slowdown in job growth. The dollar dropped more than 0.5% against major currencies worldwide. In the Israeli market, the dollar fell by 0.3% to around 2.99 shekels, while the euro remained stable above 3.42 shekels. Against a basket of leading currencies, the dollar index decreased by 0.1% to 100.7 points. The euro rose by 0.2% to trade above $1.14, and the British pound also increased by 0.2%, trading above $1.33. Trading volumes were relatively low due to the US stock market holiday for Independence Day.

Ian Lyngen, head of interest rate strategy at BMO Capital Markets, commented that the weak employment data makes it unlikely the US Federal Reserve will raise interest rates at its July meeting, even if upcoming inflation data surprises on the upside. Meanwhile, local investors are primarily focused on the Bank of Israel's upcoming interest rate decision scheduled for Monday. Forecasts indicate that the Bank, led by Governor Amir Yaron, will cut the rate by 25 basis points from 3.75% to 3.50%. This expected reduction comes despite ongoing concerns about renewed security tensions and an expansionary fiscal policy. The decision is influenced by Israel's annual inflation stabilizing around 1.9%, within the Bank's target range, and the strengthening shekel, which contributes to low inflation.