US Dollar Hits Over 3.06 Shekels Amid Global Tensions and Rising Yields

The US dollar climbed above 3.06 shekels, reaching 3.065 shekels, marking its highest level against the shekel since April 13. The euro also rose to 3.494 shekels from 3.48 shekels the previous day. Alex Zvezhinsky, chief economist at Meitav Investment House, attributed the dollar's strength to persistently high long-term US yields, driven by increased risk premiums related to deficits, debt issuance, and geopolitical risks.

Globally, the Japanese yen weakened to a four-decade low of 163.15 yen per dollar, amid Finance Minister Satsuki Katayama's warning that Japan is prepared to take "decisive action" in currency markets if necessary, according to Reuters. The dollar remained steady around 101 points against a basket of six major currencies after gaining for four consecutive days, influenced by escalating Middle East tensions and rising oil prices.

Recent attacks in the Middle East pushed oil prices higher, raising concerns about sustained inflation. Two oil tankers carrying Saudi crude to Asia altered their routes in the Red Sea due to threats from Iran-backed Houthi forces in Yemen, disrupting traffic through two critical energy chokepoints. The US military announced the completion of another round of strikes in Iran, marking the tenth consecutive night of attacks. Earlier optimism about a stable US-Iran peace agreement had lowered oil prices in early May, while recent moderate inflation data tempered market expectations for an interest rate hike at the upcoming policy meeting.