Dollar’s Rise Eases as Currency Trades Below 2.97 Shekels

The shekel weakened after the limited U.S. strike on Iran and the American president’s threat. Earlier, the dollar had strengthened further, but the trend eased after the release of U.S. inflation data, which surged to a three-year high. The dollar is up 0.4% and trading at 2.968 shekels after reaching more than 2.98 shekels today, the euro is rising 0.7% and trading at 3.429 shekels, and the pound is up 0.8% and trading at 3.978 shekels. In global markets, the euro is posting a slight gain against the dollar and trading at $1.155, the pound is showing a slight gain and trading at $1.339, and the dollar is up 0.1% against the yen and trading at 160.47 yen. The dollar index, which measures the currency’s value against a basket of major currencies, is stable and trading at 99.90 points.

The U.S. Consumer Price Index rose 0.5% in May, and the annual inflation rate jumped to 4.2%, the highest since April 2023. The jump matched analysts’ expectations and came after a surge in oil and fuel prices because of the war in Iran. “It’s not just an oil story, it’s a money supply story, and it is increasingly becoming an AI story too,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “This is a broader inflation problem than just energy, which suggests that we are likely to continue seeing some degree of ‘sticky’ inflation.” According to her, although the Trump administration says inflation will fall quickly once fighting in the Middle East subsides, that hope cannot be relied on given the significant damage already done to supply. “Even if there is a quick end to the war, we probably will not see oil prices return to their previous lows, because there was major damage to production capacity,” she said. “This is not something that can just be switched back on with the flip of a button.”

On the geopolitical front, U.S. President Donald Trump wrote today that Iran had delayed too long in peace talks and would now have to “pay the price.” “Iran’s military is a complete and utter mess,” the president said in a post on Truth Social. “Much of it, like their navy and air force, is already gone, they have been totally defeated. Iran only talks and does nothing.” Earlier, Trump accused Iran of shooting down a U.S. Army Apache helicopter over the Strait of Hormuz and said that “we will have to respond.” Shortly after midnight, U.S. Central Command announced that it had launched attacks “for self-defense” against Iran, on Trump’s orders. “The mission is a proportional response to the unprovoked Iranian attack,” it said. Tehran responded with launches toward countries in the Gulf.

At the same time, inflation data were published in China: the Consumer Price Index rose 1.2% in annual terms in May, in line with April’s figure and slightly below forecasts of 1.3%. On a monthly basis, the index fell 0.1%, compared with forecasts for a 0.2% decline. China’s Producer Price Index jumped 3.9% year on year in May, its highest level since July 2022, under pressure from rising oil prices and the AI investment boom. Forecasts had called for a 3.8% increase, after a 2.8% annual rise in April. In Japan, the Producer Price Index jumped 6.3% in May year on year, well above forecasts of 5.5%, after a reading of 5.3% in April. On a monthly basis, producer prices rose 0.9%, while forecasts had pointed to a 0.5% increase.