The Euro surges against the Dollar: How it affects Israelis
While the dollar weakens against the shekel, another leading currency is recording an unusual strengthening of more than 3%, creating a surprising offsetting mechanism that directly affects investors and savers in Israel.
Leading currencies are trading this morning with moderate gains against the shekel, against the backdrop of several factors affecting the foreign exchange and financial markets. Among other things, the market is awaiting the possibility of an interest rate cut in Israel at the beginning of September, alongside the moderate correction recorded in the markets in recent days and the continued tension in the geopolitical arena.
Or Poria, Chairman of Poria Finance, notes in his review that one of the most prominent moves in the foreign exchange market in recent times is the significant strengthening of the euro against the dollar. The European currency is approaching the level of 1.17 dollars per euro, after strengthening by more than 3% in less than a month.
The strengthening of the euro against the dollar is occurring in parallel with a decline in the dollar exchange rate against the shekel, creating an interesting offsetting mechanism for the European currency in Israel. On one hand, the shekel has strengthened against the dollar, which could have exerted pressure on the euro exchange rate in the country as well. On the other hand, the euro has strengthened in the international arena against the dollar, thereby offsetting a significant part of the impact.
As a reminder, a significant move has also been recorded in the US bond market in recent days. The US Treasury Department announced the doubling of the long-term government bond purchase program. The move provided support to the bond market and led to a sharp drop in yields.
The yield on the 30-year US bond fell from a level of 5.33% to about 5.19% at the time of writing the review. The drop in yield reflects a simultaneous increase of more than 4% in the bond price, within a short time.
According to Poria, the drop in long-term yields also provided support to the stock markets, and at this stage, it managed to stop the correction that threatened to develop in the markets during the last few days.
Now, the central question is whether this is just a temporary respite or a move that can help stabilize the markets in the future as well. For Israeli investors, developments in the US may continue to affect the foreign exchange market, the bond market, and the performance of the local stock exchange, while at the same time, interest rate decisions in Israel and the geopolitical situation are also expected to remain in focus.
