Dollar Steady Near 3.05 Shekels as Global Markets Await Key Interest Rate Decisions

The local and global foreign exchange markets are showing signs of calm, with the US dollar trading around 3.05 Israeli shekels and the euro above 3.48 shekels. Globally, the US Dollar Index remains stable at 110.0 points after a slight 0.2% rise the previous day. The euro is steady near 1.14 dollars, and the British pound holds above 1.34 dollars. Market participants are primarily focused on the upcoming Federal Reserve interest rate decision scheduled for next Wednesday, alongside inflation data releases from the UK on Wednesday and Japan on Friday.

Earlier today, New Zealand reported disappointing inflation figures for the second quarter, with a 1.5% increase compared to the first quarter and a 4.1% annual rate, slightly above forecasts. The European Central Bank (ECB) is expected to announce its interest rate decision on Thursday, with predictions indicating rates will remain unchanged. Currently, the market assigns only a 13% chance of a rate hike this week but a 78% probability of an increase at the ECB's September 10 meeting.

Ahead of the Fed's announcement, expectations are for rates to stay steady, though hikes are anticipated in September or October. This outlook is reflected in US Treasury yields, with the two-year yield climbing 0.75 percentage points since February to about 4.20%, well above the Fed's current 3.75% rate. Chi Chen, a senior partner at BlackRock's Total Return Fund, noted that the market is pricing in a more aggressive Fed stance than their forecast, which anticipates easing inflation and slower growth in the latter half of the year. Chen added that the Fed is likely to maintain a hawkish approach while waiting for data to gradually improve.