Israeli Shekel Strengthens Slightly After US Imposes New Tariffs Including on Israel

Following the announcement of new US tariffs by President Donald Trump, which include a 12.5% duty on Israeli goods, the Israeli shekel experienced a slight appreciation. The US dollar fell by 0.2%, trading above 3.06 shekels, while the euro weakened by 0.2%, trading around 3.49 shekels. Globally, the US dollar index remained stable at 101.4 points, with the euro steady just below 1.14 dollars and the British pound around 1.33 dollars. The Japanese yen saw minimal movement, trading near a 40-year low at 163.8 yen per dollar, following inflation data from Japan.

The new tariffs, set to take effect immediately as previous tariffs expire, impose 10% to 12.5% duties on 60 US trade partners, including the European Union and Israel. The White House cited concerns over "lax enforcement" of forced labor bans as justification. This move is part of Trump's broader strategy to implement near-global tariffs after the US Supreme Court struck down his earlier expansive tariff plan in February.

US Treasury yields rose in response, with the 10-year bond yield climbing 5 basis points to 4.70%, the highest since January 2025, just before Trump's second presidential term. The 2-year yield increased by 6 basis points to 4.36%, reflecting Federal Reserve interest rate expectations, and the 30-year yield rose 3 basis points to 5.17%. Vishnu Varathan, Mizuho's Asia-Pacific macro strategist, warned of a "double hit" from tariffs and supply disruptions, noting the world is adjusting to Trump's tariff tactics, which combine initial escalation with later negotiation.

In Japan, inflation rose as expected in June, with the consumer price index increasing 1.7% year-over-year and the core CPI (excluding fresh food) up 1.6%, marking the first core inflation rise since March. This inflation is mainly driven by higher oil and fuel prices.

Markets are awaiting the Federal Reserve's policy announcement scheduled for next Wednesday, with current odds favoring no change in interest rates at over 66%, and a 33% chance of a rate hike.