The shekel has strengthened against the major currencies this morning. The shekel-dollar exchange rate is currently down 0.14% in comparison with Friday's representative rate, at NIS 3.8215/$, and the shekel-euro rate is down 0.36%, at NIS 4.0674/€.
FXCM Israel says in its market review this morning, "The dollar-shekel pair continued its sharp downward correction last week, finding itself in the NIS 3.81/$ region after testing the lower limit of the range at NIS 3.80/$, the lowest rate since November 10. On world markets too we have seen a correction in the US dollar, with the dollar index closing a negative week after three successive positive ones. The correction was due, after the sharp appreciation in the value of the dollar in the weeks following the election of Donald Trump as US president, which aroused expectations on the market that his expansionary economic and fiscal policy would lead to higher inflation and oblige the US Federal reserve to raise its interest rate more rapidly than it had planned.
"The employment figures released on Friday, however, somewhat cooled these expectations. The September and October figures were revised downwards, giving a slightly less rosy picture of the US labor market. The 0.1% decline in average hourly income also served to depress the market's inflation expectations.
"The market now awaits geo-political developments, in the wake of the 'No' vote in the referendum in Italy, which will probably bring in train early elections there, and which will raise volatility levels at the opening of foreign exchange trading, boosting demand for safe-have currencies such as the Japanese yen and the Swiss franc, at the expense of the US dollar. The fear is that elections in Italy will bring to the fore forces striving for an Italian exit from the European Union. This uncertainty will of course weigh on the euro in the near term."
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2016
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