US Dollar Hits Three-Month High Against Israeli Shekel Amid Middle East Tensions

The US dollar strengthened against the Israeli shekel, rising above 3.06 shekels to reach 3.065, the highest level since April 13. This marks an increase from the previous day's official rate of 3.049 shekels. The euro also gained against the shekel, trading at 3.494 shekels compared to 3.48 shekels the day before. Alex Zvezhinsky, chief economist at Meitav Investment House, attributed the dollar's strength to sustained high long-term yields in the US, influenced by increased risk premiums stemming from deficits, debt issuance, and geopolitical risks.

Globally, the dollar remained stable around 101 points against a basket of six major currencies after four consecutive days of gains. This rise is linked to escalating tensions in the Middle East and rising oil prices, which have heightened concerns about ongoing inflationary pressures. Concurrently, the Japanese yen weakened to a four-decade low of 163.15 yen per dollar, following a statement by Japan’s Finance Minister, Shunichi Suzuki, indicating readiness to take "decisive action" in currency markets if necessary.

The regional instability is also impacting energy markets. Two oil tankers carrying Saudi crude to Asia altered their routes in the Red Sea due to threats from Yemen’s Iran-backed Houthi rebels, disrupting two key global energy shipping lanes. The US military announced it had completed another round of strikes in Iran, marking the tenth consecutive night of attacks. Earlier in May, hopes for a stable US-Iran peace deal had contributed to a drop in oil prices, while recent moderate inflation data have tempered market expectations for an imminent interest rate hike at the upcoming policy meeting.