Dollar returns to growth, trading above 2.97 shekels

A trend reversal in the foreign exchange market is underway. The shekel, which climbed sharply yesterday (the dollar fell from 3.00 to 2.97), is moving this morning to a slight retreat against its American counterpart: the dollar is rising by 0.3% and trading above 2.97 shekels, while the euro is seeing a slight retreat to around 3.47 shekels.

In global markets, the dollar index against a basket of leading currencies stands at 98.9 points. The euro is down 0.1%, trading above 1.16 dollars, and the pound is down 0.1%, trading above 1.36 dollars. Trading is taking place against the backdrop of a strong downward trend in oil prices, which is expected to roll over to oil products and contribute to a decline in inflation.

The most notable reaction was recorded yesterday in US bond yields, which saw strong declines:

• The yield on 10-year US bonds fell by 8 basis points to 4.63%.

• The yield on 30-year bonds fell by 6 bps to 5.16%.

• The yield on 2-year bonds fell by 5 bps to 4.18%.

Today, the Personal Consumption Expenditures (PCE) price index for July will be published in the US, a highly significant inflation index for the Fed in formulating its monetary policy. Beyond that, investors are mainly waiting for the speech by Fed Chair Kevin Warsh at the annual central bankers' conference in Jackson Hole, which opens tomorrow.

"Given the approach he adopted in the June and July press conferences, we believe it is unlikely that he will immediately move to an in-depth discussion of the current economic outlook and its implications for monetary policy later in 2026," wrote Kurt Lewis, head of central bank policy at Piper Sandler.

"We do expect him to devote the bulk of his remarks to broader issues, with an emphasis on economic activity and how key issues will be addressed by the Fed's task forces," added Lewis.