The shekel is strengthening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.52% against the dollar at NIS 3.582/$ and down 0.20% against the euro at 4.048/€.
On Friday before the Shavuot holiday, the Bank of Israel set the shekel-dollar representative rate unchanged from Thursday at NIS 3.601/$ from Monday's rate, and set the shekel-euro rate up 0.20% at 4.056/€.
The dollar is weaker on world markets after on Friday, the US government reported that only 75,000 new jobs were created in May, well below the forecast of 175,000 new jobs.
This weak figure has contributed to expectations that the US federal Reserve will cut the interest rate. However, Meitav DS analysts said, "The Fed will not be able to find justification for cutting the interest rate in the labor market data unless it very much wants to. Forecasts in the US are already talking about three rate cuts before the end of the year and a 25% probability that the interest rate will be cut at the coming meeting on June 19. This would mean that in three of the next four meetings, the rate would be cut. Such a scenario would be somewhat extreme and assumes a major deterioration in the US economy, which is hard to reconcile with the rises last week on the stock market."
Meitav DS added, "With the fed itself expressing readiness and joining in with the trend towards cutting the interest rates that the market is reflecting, and which is causing the dollar to weaken together with falling commodity prices, it looks like raising interest rates in Israel will only happen if the Bank of Israel really has to. Meanwhile, in terms of the inflation situation, it doesn't look like this is the case. The main risk to yields is expressed in the government deficit."
Published by Globes, Israel business news - en.globes.co.il - on June 10, 2019
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