Between American and Israeli inflation: slight rise in the dollar, above 2.98 shekels
Foreign exchange markets remain calm ahead of Israeli inflation data. The dollar is up 0.1% at 2.98 shekels, while annual US inflation dipped to 3.4% in July.
Calm prevails in the foreign exchange markets, one day after the publication of US inflation data for July and ahead of tomorrow's release of July inflation figures in Israel. The dollar is rising by 0.1%, trading above 2.98 shekels, while the euro remains largely unchanged around 3.44 shekels.
In global markets, the dollar index against a basket of leading currencies remains steady at 100.0 points. The euro is stable above 1.15 dollars, and the pound is holding slightly below 1.35 dollars. Annual inflation in the USA fell slightly in July to 3.4%, down from 3.5% in June. Prior to the next Fed decision on August 16, the employment report and US inflation data for August are still to be released.
Ian Lyngen, head of US rates strategy at BMO Capital Markets, stated:
"Overall, the data met expectations and leaves the Fed the option to leave the interest rate unchanged in September, but they are by no means decisive. The decision in September now depends on the combination of employment data and the Consumer Price Index for August."
Analysts at the Mizrahi Tefahot trading room noted:
"After the sharp monthly decline in June, against the backdrop of moderating energy prices, the July index continues to reflect this trend. Together with a slight inflationary trend, this brings us to a monthly increase of only about 0.1%, which moderates annual inflation to the 3.4% level — a three-month low. In core inflation, an increase of 0.2% stabilizes us at only 2.5%. Let us recall that four months ago, with the rise in energy prices, we were at nearly 3.0%. And it should be noted that this entire journey was at the same Fed interest rate level of 3.5%-3.75%."
Mizrahi Tefahot added: "Looking ahead, with the rise in barrel prices in Texas in recent days, it is possible to expect that the achievement we saw today will not be repeated in August. Against this background, the probability of an interest rate hike by the Fed in about a month is hovering around a significant 50%."
