US Inflation Eases Slightly, Israeli Shekel Holds Steady Against Dollar

Following the release of US inflation data for July, the foreign exchange markets showed relative calm. The US dollar rose marginally by 0.1%, trading just above 2.98 Israeli shekels, while the euro remained stable around 3.44 shekels. Globally, the US dollar index held steady at 100.0 points against a basket of leading currencies, with the euro stable above $1.15 and the British pound just below $1.35.

US annual inflation dipped slightly to 3.4% in July from 3.5% in June. Ahead of the Federal Reserve's next decision on August 16, key reports including US employment and inflation data for July are expected. Ian Lyngen, head of US rates at BMO Capital Markets, noted that the data met expectations and leaves the Fed room to keep interest rates unchanged in September, but the decision will depend on August's employment and consumer price index figures.

Research from Mizrahi Tefahot's trading desk highlighted that July's inflation data reflects continued easing, with a modest monthly increase of about 0.1%, bringing annual inflation to a three-month low of 3.4%. Core inflation rose 0.2%, stabilizing at 2.5%, down from nearly 3.0% four months ago. This occurred while the Fed's interest rate remained between 3.5% and 3.75%. However, with recent rises in Texas oil prices, Mizrahi Tefahot anticipates that August's inflation figures may not replicate July's improvement, and the probability of a Fed rate hike in about a month has risen to around 50%.