The shekel is stronger against the dollar and weaker against the euro in inter-bank trading this morning ahead of publication of the March Consumer Price Index (CPI) by Israel's Central Bureau of Statistics. The shekel-dollar exchange rate is trading down 0.50% against the dollar at NIS 3.964/$ and the Israeli currency is up 0.17% against the euro at 4.223/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.984/$, down 0.747% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.212/€, down 0.336%.
FXCM Israel research department said this morning, "After the shekel-dollar rate rose above the NIS 4/$ mark at the start of the week, it has retreated sharply lower and is trading around NIS 3.96/$. In other words the break above NIS 4/$ at the start of the week can be considered a false breakthrough in technical terms, with trading still within the NIS 3.90-4/$ range."
"The latest sharp fall in the shekel-dollar rate is due to the fall of the dollar on world markets because of disappointing macroeconomic data and the IMF's lowering of its US growth forecast. Even positive sentiment on Wall Street following the good opening in terms of profit to the financial reporting season has weighed on the dollar, burning the hands of long traders on the domestic market and lowering the shekel-dollar rate back into middle of the range."
FXCM Israel continued, "Today local foreign currency traders will focus on the Consumer Price Index (CPI) for March. The data could really cause increased volatility in the shekel-dollar exchange rate this afternoon. If the index points towards increased deflationary pressures, then the shekel will weaken because this will intensify speculation that the Bank of Israel will implement another interest rate cut and perhaps even quantitative easement. On the other hand, a higher than expected CPI will strengthen the shekel, and is likely to hasten movement of the two currencies, towards the lower end of the price range."
Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2015
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