Wait-and-see mode in forex before the employment report - the dollar is stable at 3.01 shekels

Stability prevails in currency markets, both local and global, ahead of the publication of the July employment report in the USA. The dollar is trading unchanged, around 3.01 shekels, while the euro is rising slightly, trading above 3.47 shekels.

In global markets, the dollar index against major currencies remains without significant change at 99.9 points. The euro is stable above 1.15 dollars, and the pound is stable above 1.13 dollars. Stability is also observed against the yen, with the dollar at 158.4 yen.

The July employment report will be published at 15:30 (Israel time). The picture will be completed next week with the July inflation data in the USA, to be published on August 12. The next Fed interest rate decision is expected on September 16, so by then, the employment report and inflation data for August will also be available.

According to forecasts, job growth will stand at 85 thousand, and the unemployment rate will remain unchanged at 4.2%. Fed officials usually focus more on the unemployment rate than on the volatility of monthly job data. The unemployment rate in the USA remains relatively low mainly due to the decline in the labor force participation rate. In fact, the number of employed persons in 2026 decreased by 833 thousand. Thus, in practice, it is possible that the unemployment rate is higher and will rise later.

For this reason, economists at Citigroup believe that the Fed's equation may change later in the year: from the parallel target of low inflation and full employment, the weight will shift to supporting employment. In such a situation, the American bank estimates—contrary to prevailing market forecasts—that the Fed will implement 3 interest rate cuts by January 2027.

"While for now the labor market data can still be described as stable, we estimate that this will change within a few months, when the unemployment rate rises above 4.5%," wrote economist Veronica Clark from Citigroup. "Such a development will return the focus to the possibility of interest rate cuts, with our base scenario being that the Fed will resume interest rate cuts in the fourth quarter."

In the last employment report for June, job growth stood at only 57 thousand, a figure significantly lower than economists' forecasts of 115 thousand jobs. The report also included a downward revision of May and April data. Job growth in May was revised to 129 thousand jobs, compared to 172 thousand in the original report. The April report, which originally stood at 179 thousand jobs, was revised to only 148 thousand.