US Dollar Stable Against Shekel Ahead of July Employment Report Release

The foreign exchange markets, both local and global, remain stable ahead of the US July employment report scheduled for release at 15:30 Israel time. The US dollar is trading steady at around 3.01 shekels, while the euro has risen slightly, trading above 3.47 shekels. Globally, the dollar index remains largely unchanged at 99.9 points against major currencies, with the euro steady above 1.15 dollars, the British pound stable above 1.13 dollars, and the Japanese yen holding at 158.4 per dollar.

The employment report will be followed next week by the US July inflation data, due on August 12. The Federal Reserve's next interest rate decision is expected on September 16, by which time both the August employment and inflation reports will also be published. Forecasts predict an increase of 85,000 jobs in July and an unchanged unemployment rate of 4.2%. Fed officials typically focus more on the unemployment rate than monthly job fluctuations.

Despite the low unemployment rate, it is partly due to a decline in labor force participation, with the number of employed persons projected to drop by 833,000 in 2026. This suggests the actual unemployment rate may be higher and could rise in the future. Economists at Citigroup believe the Fed's policy focus may shift later this year from balancing low inflation and full employment to prioritizing employment support. They predict the Fed could cut interest rates three times by January 2027, contrary to prevailing market expectations.

Veronica Clark, an economist at Citigroup, noted that while the labor market currently appears stable, she expects the unemployment rate to exceed 4.5% within months, which would renew prospects for rate cuts, potentially starting in the fourth quarter. The previous June employment report showed a job increase of only 57,000, well below economists' forecast of 115,000, and included downward revisions for May and April job gains.