US Dollar Stable Against Shekel as Fed Holds Rates, Euro Climbs to 3.52 Shekels

The US dollar stabilized against the Israeli shekel, trading near 3.08 shekels following the Federal Reserve's decision to keep interest rates unchanged and Chairman Jerome Powell's press conference, which pressured the dollar downward. Meanwhile, the euro continued its rise, reaching 3.52 shekels after climbing from 3.48 to 3.50 shekels the previous day. This movement occurred amid renewed US strikes in Iran.

Globally, after a sharp dollar decline post-Fed decision, the dollar index remained steady at 100.9 points against a basket of major currencies. The euro slipped slightly by 0.1%, trading above $1.14, while the British pound weakened by 0.2%, trading above $1.33. Fabien Yip, a market analyst at IG, noted that although three Fed members supported a rate hike in July, Powell avoided suggesting an imminent increase, maintaining a tone similar to June. This stance is causing investor uncertainty about the Fed's ability to maintain long-term inflation expectations.

US government bonds reacted strongly to the Fed's decision, with the 30-year bond yield jumping 11 basis points to 5.20%, its highest since July 2007, and the 10-year yield rising 8 basis points to 4.68%. Futures on Wall Street now price a 42.6% chance that the Fed will keep rates steady at its next meeting on September 16, up from 24% before the last rate decision.

Steve Englander, head of G10 currency research at Standard Chartered in New York, expressed concerns that markets might react negatively if the Fed appears hesitant to tighten policy when necessary. He also highlighted market participants' unease with Powell's ambiguous responses during the press conference, which would have typically received more direct answers in the past.