The shekel has strengthened dramatically this morning against the major currencies. The shekel-dollar rate is currently down 1.25% in comparison with yesterday's representative rate, at NIS 3.8898/$, while the shekel-euro rate is down 1.08%, at NIS 4.5801/€.
This evening, the CPI reading for December and for 2014 as a whole will be released by Israel's Central Bureau of Statistics. Macro analysts estimate that the index fell 0.1% in December, which would mean a fall of 0.1% for the year.
FXCM Israel says in its market review this morning that after marking time for several days in the NIS 3.93-3.95/$ region, the shekel-dollar exchange rate dived yesterday and broke through the NIS 3.90/$ level, reaching NIS 3.88/$.
"If the rate reaches a level below the December low of NIS 3.875/$ at the end of the day, this could accelerate the decline and signal the next stage of the correction that began last month with the failure to break through the NIS 4/$ level. A fall below NIS 3.875/$ will pave the way to NIS 3.85/$."
FXCM explains that the trigger for the pair to nosedive was the weakness of the dollar on world markets stemming from poor US macro figures. Also, the oil price shot up by more than 5% yesterday, its sharpest daily rise for over two years. The rise in the oil price weakened the dollar, but according to FXCM the main factor for negative sentiment towards it was disappointing US retail sales figures released yesterday, the latest in a series of macro figures that diminish confidence in the strength of the US economic recovery and hence diminish expectations of an interest rate rise in the US.
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2015
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